What is the Regulatory Sandbox?
The Regulatory Sandbox is an arrangement set up by the three regulatory authorities to provide entities with the facility to test innovative financial products or services, business models and/or delivery mechanisms prior to launching them to the public. It will enable Fintechs to obtain a provisional license and be subject to certain parameters and rules while testing in a live environment under the regulators’ close scrutiny.
Objective of the Regulatory Sandbox
To determine whether the innovative financial product or service can be introduced safely into the domestic financial environment.
The Regulatory Sandbox will be rolled out in two phases.
Phase 1 - E-money Issuers
Phase 1 will allow E-money Issuers (EMIs) to be tested in the sandbox. The E-Money Issuer Order allows for provisional registration of the entity. The provisional registration would allow the EMI to operate for a limited period (six months as specified in the Order) with a limited amount of customers and the Bank may choose to waive one or more of the registration requirements or may add conditions and limitations on the entity’s operations to protect consumers and mitigate risks to the payments space, while it assesses the entity’s ability to comply with the registration requirements.
The Central Bank may extend the provisional registration for a further six months if it considers that good progress has been made but the entity needs some more time to meet all the registration requirements set out in the Order before granting an annual registration.
Phase 2 - Broader Fintech initiatives.
Phase 2 entails the broader fintech initiatives, including those involving cryptoassets, that may span all three (3) regulators. It may require amendments to each of the regulator's legislative framework.