International FinTech Regulatory Sandboxes Launched by Forward-Thinking Financial Authorities

As financial technology startups become an immense part of the global financial system, an appropriate environment is required to understand and leverage opportunities presented by new entrants. Regulatory Sandboxes became a universal framework, in which regulators, financial institutions, entrepreneurs and industry professionals can interact and better understand each other.

Among the most important benefits of Regulatory Sandboxes are reduced time to market, opportunity to contain consequences of failure, enhanced access to capital, curated quality of products reaching national markets, regulatory relief and assurance of the best solution for the end-user.

Over the past couple years, a few international financial authorities in collaboration with financial institutions have launched regulatory sandboxes, creating safe environments to take risks. Let's look at some of the most important initiatives starting with the most recent ones.

FinTech Regulatory Laboratory by Abu Dhabi Global Market (ADGM)

On the second day of November, Abu Dhabi Global Market (ADGM), the International Financial Centre in Abu Dhabi, launched its Regulatory Laboratory (RegLab) with the implementation of its FinTech legislative framework with effect from November 2, 2016. This follows ADGM’s announcement in March 2016 to develop Abu Dhabi as the FinTech hub in the MENA region, and after an extensive consultation and engagement with local and global FinTech industry stakeholders.

ADGM’s RegLab is a tailored regulatory regime for FinTech participants. It is designed to foster innovation within the UAE financial services market for both new market entrants and existing financial institutions.

By taking into account the unique business model and risks of the FinTech participant and customizing the test boundaries and regulatory requirements accordingly, the RegLab allows the participant to develop and test its FinTech proposition in a safe environment while not putting an undue regulatory burden on the participant. As the first of such initiatives in the region, ADGM’s RegLab authorizes FinTech participants for a period of up to two years to develop and test their FinTech proposition.

Richard Teng, Chief Executive Officer, FSRA of ADGM commented in the official press release, saying, We are very excited to launch the ADGM RegLab and it is encouraging that interests have been pouring in since we announced ou ...