Published by Global Banking & Finance Review®
Posted on March 4, 2026
3 min readLast updated: April 2, 2026
Add as preferred source on GoogleUS and UK regulators differ on how to pilot tokenised securities: the UK champions a sandbox model, while the US SEC prefers exemptive relief, highlighting differing innovation-versus-caution philosophies amid broader crypto alignment efforts.
By Phoebe Seers and Elizabeth Howcroft
LONDON/PARIS, March 4 (Reuters) - British and U.S. regulators are divided over how to test blockchain-based versions of financial securities, with Britain pushing for a more cautious approach in talks aimed at boosting crypto collaboration, sources said.
The U.S. and Britain announced in September a taskforce for reducing regulation for companies seeking to access each other’s markets and to improve digital asset cooperation.
The split shows how financial regulators globally have to contend with a pro-crypto U.S. under President Donald Trump. The U.S. has eased crypto regulation and encouraged cryptocurrency adoption.
Britain also wants to expand its digital assets industry, but some UK regulators, such as the Bank of England, are cautious about moving too quickly.
The U.S. and Britain are already in broad agreement on the taskforce's aims, including working towards closer alignment of rules for stablecoins, digital assets backed by actual currencies.
But Britain's preference for testing joint work on tokenised securities - blockchain-based versions of financial assets such as stocks or bonds - via a so-called "sandbox" emerged as an obstacle when the regulators met earlier this year, two sources who attended the discussions said.
Regulatory sandboxes are used by Britain's financial watchdog to test innovative financial products in a controlled environment.
A U.S. Securities and Exchange Commission representative at the meeting in January this year expressed concern about using a sandbox, citing doubts about the commercial viability for participants and its potential impact on innovation, the two sources, who attended the January meeting of the Transatlantic Taskforce for Markets of the Future, said.
The SEC is weighing a different approach to tokenisation, known as "exemptive relief", which has the backing of the U.S. crypto industry, the sources said, asking for anonymity because the talks were private.
The SEC told Reuters it would continue working with the UK "to build consensus and harmonize rules for international market participants", adding there was "significant opportunity to align our frameworks to support the future of finance."
The BoE and UK finance ministry declined to comment. The U.S. Treasury did not respond to a request for comment.
The FCA said sandboxes can be valuable as the two countries develop capital markets and payments systems while "maintaining trust and integrity."
Regulatory sandboxes give firms "space to test new ideas in a live but controlled environment and helping us understand emerging risks and opportunities," the FCA said.
Tokenisation's supporters say it can be more efficient and cheaper, but regulators say tokenised stocks create new risks for investors and could harm market integrity.
Both sides of the taskforce also want to agree on reciprocity, so that companies regulated in one market will be able to transact in tokenised stocks in the other with limited additional checks, the two sources said.
The taskforce will report its recommendations by the summer.
(Reporting by Phoebe Seers and Elizabeth Howcroft; Additional reporting by Hannah Lang and Douglas Gillison; Editing by Tommy Reggiori Wilkes and Jane Merriman)
The split stems from different approaches to testing blockchain-based financial securities. The UK prefers a cautious 'sandbox' approach, while the US is considering 'exemptive relief'.
A regulatory sandbox allows firms to test innovative financial products like tokenised securities in a controlled, supervised environment.
The US SEC prefers using exemptive relief to encourage innovation, whereas the UK encourages testing through regulatory sandboxes.
The taskforce aims to reduce regulatory barriers, align digital asset rules, and allow reciprocal treatment of companies in both markets.
The taskforce plans to report its recommendations by the summer.
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