Sandboxes in the desert: is a cross-border ‘gulf box’ feasible?

Abstract

ABSTRACT Many financial hubs around the world have used regulatory sandboxes as a tool to support and promote innovation in financial technology. Sandboxes can manage and control risks without stifling innovation. In recent years, the Arab Gulf States (Kuwait, Saudi Arabia, Qatar, Oman, Bahrain and United Arab Emirates) have introduced (or are introducing) regulatory sandboxes to, among other things, support economic diversification efforts through the promotion of financial technology. These jurisdiction-specific sandboxes are emerging at a time when other international hubs and global networks are already establishing regional and cross-border sandbox platforms. Given the cultural and economic similarities between Gulf States, a regional sandbox may be the ostensible logical progression. Beyond this vision, however, policymakers must first address and overcome several serious obstacles. Geopolitical realities and the sensitives around data sharing (particularly in a financial context) constitute some of the most critical challenges mitigating against a single sandbox policy. Rightly calibrated, a regional sandbox may encourage both a flourishing of the fintech sector in the region, and mending ties between Gulf States.