TransAtlantic Sandbox Marks UK’s Push for Global Crypto Regulatory Bridge
Industry leaders weigh promise and pitfalls of UK-U.S. sandbox as London tightens crypto oversight and adoption surges
As the UK accelerates its push to regulate the fast-growing crypto industry, a key plank of its international strategy is the proposed TransAtlantic Sandbox—a regulatory collaboration with the United States to align oversight and ease cross-border innovation.
However, while some see the initiative as a forward-thinking experiment, others warn it may be more symbolic than practical.
Announced by U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce in May 2024, the TransAtlantic Sandbox proposal was quickly followed by discussions between UK and U.S. officials and the release of the UK’s own draft crypto legislation.
It was touted as a mechanism to let digital asset firms test products simultaneously in both jurisdictions under shared principles, potentially easing market entry and promoting innovation.
Yet, industry experts expressed mixed views on the sandbox's real-world potential at a panel meeting this month at the Digital Assets Summit in London.
“Harmonization is a dream that we will never achieve,” said Laura Navaratnam, UK Policy Lead at the Crypto Council for Innovation. “Getting the right people around the table to agree on what a base level of standards looks like is incredibly challenging.”
A Vision of Reciprocity—Not Uniformity
Navaratnam did acknowledge that the sandbox offers a timely platform for dialogue.
“The UK can’t wait for the U.S., and we also can’t be reactionary to what’s already happened in Europe,” she said. “There needs to be a level of reciprocity—not uniformity, but mutual understanding.”
The goal of the TransAtlantic Sandbox is to help regulators and industry stakeholders identify regulatory overlaps and discrepancies early, minimizing friction in innovation-heavy sectors like decentralized finance (DeFi), stablecoins, and tokenized assets.
The sandbox holds promise for UK regulators and fintech firms navigating an increasingly complex global landscape, especially given the UK’s post-Brexit drive to differentiate itself from EU rules such as the Markets in Crypto-Assets Regulation (MiCA).
But Joey Garcia, Chief Digital Asset and Legal Officer at Xapo Bank, doubted the sandbox’s viability.
“It’s a complete pipe dream,” he said. “It hasn’t happened in any financial market in the world over the last 150 years, and this one is 50 times more complex.”
Garcia, who has consulted for the United Nations and advised multiple jurisdictions on crypto regulation, noted the challenges posed by diverging international standards. Even recommendations from the Financial Action Task Force (FATF)—a global body that sets anti-money laundering standards—have been inconsistently adopted.
“What’s a ‘virtual asset’ in the UK is different from what it is in the EU,” Garcia said.
Crypto Oversight Tightens at Home
The debate over the sandbox’s feasibility comes as the UK is rolling out one of its most comprehensive crypto regulatory reforms to date. Alongside the sandbox announcement, the UK government unveiled new legislation that includes a draft Property (Digital Asset Etc.) Bill, a regulatory treatment of stablecoins, and a broader framework for crypto trading platforms.
Chancellor of the Exchequer Rachel Reeves described the move as part of her government’s commitment to “make Britain the best place in the world to innovate and the safest place for consumers.”
The Financial Conduct Authority (FCA) also published a discussion paper on topics such as staking, lending, and using credit for crypto purchases.
Navaratnam welcomed the pace of development: “Finally, we now have the legislation that the FCA needs to begin regulating this space properly.”
However, she cautioned that aspects of the proposals—such as the consumer credit framework applied to crypto lending—were “a little bit heavy-handed.”
Stablecoins: A Litmus Test for Global Alignment
The panelists emphasized that stablecoin regulation is a prime example of where sandbox-like alignment could prove valuable, or highlight regulatory disconnects.
Ian Taylor, Board Advisor at CryptoUK, warned that the UK’s new framework risks creating a two-tier system.
“If you’re a UK firm issuing stablecoins, you face capital requirements and conduct rules that offshore issuers might avoid. Why would you choose to invest in the UK?” he asked.
Taylor added, “This is a fundamental departure from MiCA in Europe, where issuers must be regulated in the EU to access the market. In the UK, that requirement doesn’t exist yet.”
“Yes, UK issuers will face a higher burden. But there are also advantages to being a regulated entity—it provides credibility and potentially a marketing edge,” Navaratnam said, noting the importance of proportionality in applying rules.
Garcia, involved in the now-defunct Diem (formerly known as Libra) stablecoin initiative, underscored the real-world stakes: “Sometimes regulation is not the driver of growth. Tether didn’t reach its size by pursuing the highest standard globally.”
He also warned that the UK could become a “net importer of stablecoin risk” if domestic regulation overreaches while foreign-issued tokens remain freely accessible.
Time to Act, Not Just Talk
Despite the uncertainty, the sandbox has already spurred valuable conversations about cross-border cooperation. Panelists acknowledged that even a symbolic sandbox could help regulators better understand each other’s frameworks and offer businesses a glimpse into regulatory expectations on both sides.
Taylor believes the UK should not wait for international consensus: “If we want to be a crypto hub, we must start acting like one. A sandbox is a step in the right direction, even if it’s just bilateral.”
Navaratnam stressed that the initiative could shape more dynamic policymaking. “We need to move past the policies of five years ago and look at the market today,” she said. “The sandbox gives us a venue for that.”
Garcia remained cautious. “We’re dealing with a global, digital market that doesn’t respect borders. Trying to impose jurisdictional perimeters on that is like managing the internet by building a bunch of intranets.”
Following industry consultation, the final version of the UK’s digital asset legislation will be released later this year. Meanwhile, the Financial Services Growth and Competitiveness Strategy, launching on July 15, will outline the country’s broader fintech roadmap.
Whether the TransAtlantic Sandbox proves a breakthrough or remains a diplomatic signal, its launch has ignited a necessary debate about rules and where and how to lead.