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UK plans
to launch Digital Protection Fund
The UK Financial Conduct Authority (FCA)
- on the instructions of the Treasury
- plans to launch a second digital protection fund to
- do new things with digital securities" in the first quarter of 2024
According to the Head of Capital Markets of
the Financial Supervisory Authority, Helen Boyd.
Speaking :
at the CCData Digital Assets Summit on October 3rd
Boyd said the Protection Fund's new pilot program
will explore what is possible using symbolic tools
It acts more as an infrastructure protection fund unlike
the current :
"Innovation Protection Fund", which was launched on August 1.
"It's a whole new way to make regulations"
Boyd said :
In the past :
we tended to wait for activity to emerge and organize it.
The Digital Securities Protection Fund (DSS) is the result of
a consultation launched by the UK Treasury in July, which ended on 22 August.
As the UK's top financial market regulator
the FSA will oversee the pilot environment.
The Treasury Department's consultation stated that "the DSS system
will facilitate the testing and certification of
digital securities across financial markets."
Through DSS :
the industry will be able to
create financial market infrastructure using digital asset technology
which can carry out a number of activities related to digital
securities within a provisionally amended legislative and regulatory framework.
UK Treasury :
Digital Securities Protection Fund :
In July 2023 :
- the Treasury began consultation on the framework of
- the Decision Support System, the first sand fund
- for financial market infrastructure (FMI).
The DSS consultation identified :
how enterprises will be able to apply for the establishment
and operation of digital securities warehouses
and trading venues under an amended interim legislative framework.
The three
core objectives of the DSS system are:
Testing the extent to which existing legislation in
the United Kingdom needs to change to accommodate digital asset technology;
Enabling :
the financial sector to
test and adopt digital asset technology in financial management
institutions;
and testing the use of FMI sand boxes as a policy-making concept.
The activities :
proposed to be within the scope of
the decision support system were essentially those functions currently performed
by central securities deposits, such as reconciliation and maintenance services.
The Protection :
Fund is scheduled to last for five years
with a possible extension, and the Treasury hopes that
if the Protection Fund proves successful
the interim adjustments will eventually become permanent.