Over the last two years, regulatory sandboxes have begun springing up around the world, enabling firms to test new products and services in a controlled environment. The concept has gained such momentum that the UK's Financial Conduct Authority has even begun leading efforts towards some form of global sandbox.

But Hester Peirce, a Republican who became an SEC commissioner in January, is not a fan. In a speech dedicated to ICOs at a conference in Los Angeles, Peirce made clear that she is in favour of an arm's length relationship with the firms she helps regulate, suggesting that the SEC simply build a web page on ICOs, tokens and DLT.

A noted sceptic of regulatory intervention who has been critical of the Dodd-Frank rules brought in after the 2008 economic crisis, Peirce told her audience in California that she is "often wary of so-called regulatory sandboxes".

She continues: "I am entirely in favour of finding ways to make appropriate regulatory allowances that clear the way for innovation to flourish. What troubles me about sandboxes, however, is that the regulator is typically sitting right there next to the entrepreneurs. The regulator is facilitating and hosting the sandbox."

Instead, Peirce prefers the beach lifeguard metaphor: "On a beach, the lifeguard watches over what is happening, but she is not sitting with sandcastle builders monitoring their every design decision. From her perch on the lifeguard stand, she can spot dangerous activity and intervene with a blow of the whistle or, if necessary, a direct intervention. She always stands ready to answer questions about the rules of the beach. She puts up the red flag to warn of dangerous riptides or sharks."

With ICOs and tokens currently generating much discussion in relation to securities violations, Pierce is keen to ensure that innovation is not hampered. To that end, she suggests that the SEC should meet market participants in a "more neutral place" than a sandbox.

Rather than work side-by-side with firms, she argues that the SEC should simply set up a web page devoted to questions and comments about ICOs, tokens, distributed ledger, and other crypto concepts.

"We already have an email address—fintech@sec.gov—that folks can use to contact SEC staff for the purpose of discussing their fintech projects and regulatory options. A website would be easier for innovators to find."