Regulatory Sandboxes Research Articles

Regulatory Sandboxes and Innovation-friendly Regulation : Between Collaboration and Capture

Regulatory Sandboxes and Innovation-friendly Regulation : Between Collaboration and Capture

Lessons from Cyberspace Regulation and Internet Governance for Implementing Artificial Intelligence Regulatory Sandboxes

Lessons from Cyberspace Regulation and Internet Governance for Implementing Artificial Intelligence Regulatory Sandboxes

Worldwide Adoption of Regulatory Sandboxes: Drivers, Constraints and Policies

Worldwide Adoption of Regulatory Sandboxes: Drivers, Constraints and Policies

Open for business: the discursive diffusion of regulatory sandboxes for fintech innovation

ABSTRACT Within a timespan of a few years, regulatory sandboxes, a novel initiative for testing fintech innovations, have spread to financial conduct authorities across the world. We study the discursive diffusion of this regulatory innovation as evidence of a broader reconfiguration of relations between the financial sector and its regulators. To do so, we analyse media articles, policy documents, and political speeches, identifying the logics and arguments used to diffuse rhetorical sandboxes. Based on the initial mapping, we detail the anatomy of three national arguments, showing how the underlying rationales for establishing sandboxes are variously reproduced across the contexts of the UK, Singapore, and Denmark. In each case, we find, innovation is posited as a driver of competition, which, in turn, leads to economic growth. Through regulatory sandboxes, financial regulators are becoming actively involved in the promotion of innovation and, hence, continue to rely on and reproduce the exhausted promissory legitimacy of neoliberalism. Whilst appearing to depoliticize the field of finance, the assumption that regulators should be ‘open for business’ is in itself political; as such, we argue, it needs to be approached more critically, which becomes possible by shifting the analytical focus from discursive diffusion to rhetorical struggle.

Installation of Regulatory Sandbox Environment from the Perspective of the Brazilian Charter for Smart Cities

The development of smart and sustainable cities is becoming a real necessity for Brazilian municipalities. As such, the objective of this article was to present the concept of smart cities, as well as the guidelines proposed by the Brazilian Charter for Smart Cities. Subsequently, the Regulatory Sandbox in cities is presented. It is an instrument proposed in the Charter and regulated by Federal Complementary Law No. 182/2021, and can also be installed in Brazilian municipalities, through temporary Government authorization. Its institution aims to develop innovative business models and test new technologies, with a view not only to improving the quality of life of its population but also as an instrument to be used to actively participate in the construction of a smart city. In this way, the analysis of the scientific and academic production carried out about the Regulatory Sandbox in Brazil was decided upon. The methodology used was analytical research, through literature review. The results showed that digital transformation is a fundamental change in cities and, the institution of a Sandbox model is a secure way to test and validate resource-saving technologies.

How to design a better model for China’s enhanced Fintech regulatory sandbox?

Recent years have seen the rapid development of the world’s financial technology industry (Fintech). Because of the innovation and risk controllability of the Fintech “regulatory sandbox”, it has become an effective model for financial technology regulation. This article firstly introduces the background and mechanism of China’s regulatory sandbox and summarizes the drawbacks. Then we analyse the mechanism and operation process of the Fintech regulatory sandbox in the UK and Singapore, where we sum up the experience that China can refer to. Finally, our project points out the positive significance of our newly-created model and its possible limitations.

Criminal Justice Technology and the Regulatory Sandbox: Toward Balancing Justice, Accountability, and Innovation

Criminal Justice Technology and the Regulatory Sandbox: Toward Balancing Justice, Accountability, and Innovation

Liability for harm caused by AI in healthcare: an overview of the core legal concepts.

The integration of artificial intelligence (AI) into healthcare in Africa presents transformative opportunities but also raises profound legal challenges, especially concerning liability. As AI becomes more autonomous, determining who or what is responsible when things go wrong becomes ambiguous. This article aims to review the legal concepts relevant to the issue of liability for harm caused by AI in healthcare. While some suggest attributing legal personhood to AI as a potential solution, the feasibility of this remains controversial. The principal-agent relationship, where the physician is held responsible for AI decisions, risks reducing the adoption of AI tools due to potential liabilities. Similarly, using product law to establish liability is problematic because of the dynamic learning nature of AI, which deviates from static products. This fluidity complicates traditional definitions of product defects and, by extension, where responsibility lies. Exploring alternatives, risk-based determinations of liability, which focus on potential hazards rather than on specific fault assignments, emerges as a potential pathway. However, these, too, present challenges in assigning accountability. Strict liability has been proposed as another avenue. It can simplify the compensation process for victims by focusing on the harm rather than on the fault. Yet, concerns arise over the economic impact on stakeholders, the potential for unjust reputational damage, and the feasibility of a global application. Instead of approaches based on liability, reconciliation holds much promise to facilitate regulatory sandboxes. In conclusion, while the integration of AI systems into healthcare holds vast potential, it necessitates a re-evaluation of our legal frameworks. The central challenge is how to adapt traditional concepts of liability to the novel and unpredictable nature of AI-or to move away from liability towards reconciliation. Future discussions and research must navigate these complex waters and seek solutions that ensure both progress and protection.

"Regulatory Sandboxes" Could Solve the Regulatory Problems Encountered in Europe and Arising from Innovation in Biological Medicinal Products.

Pharmaceutical innovation can sometimes clash with existing regulations, creating challenges for pioneering medicinal products, especially biologics, as they transition from the research phase to product development and post-approval categorisation. For instance, vaccines and advanced therapy medicinal products must fall under the category of biological medicinal products. However, the ability to chemically synthesise both proteins or mRNA can rule out classifying them as vaccines or advanced therapy medicinal products. Consequently, many organic products face regulatory obstacles when attempting to reach the market owing to their inherent natures or involved technologies. The European Commission's proposal for a directive to overhaul the European Union pharmaceutical legislation brings in a new tool: the regulatory sandboxes. They could be a suitable solution to manufacture pioneering medicinal products. Regulatory sandboxes are a form of legal experimentation helping with the marketing of a medicinal product based on groundbreaking technology as they sidestep current regulations. In essence, a regulatory sandbox is a tailor-made, inherently flexible, and time-limited regulatory framework facilitating the development of a drug outside the standard regulatory framework.

Introducing a Regulatory Sandbox Into the Indonesian Health System Using e-Malaria as a Use Case: Participatory Action Study.

Regulatory sandboxes offer an alternative solution to address regulatory challenges in adopting disruptive technologies. Although regulatory sandboxes have been widely implemented in the financial sector across more than 50 countries, their application to the health sector remains limited. This study aims to explore stakeholders' perspectives on introducing a regulatory sandbox into the Indonesian health system using e-malaria as a use case. Using a participatory action research approach, this study conducted qualitative research, including desk reviews, focus group discussions, and in-depth interviews with stakeholders. This study sought to understand stakeholders' concerns and interests regarding the regulatory sandbox and to collaboratively develop a regulatory sandbox model to support the malaria program. The study revealed that most stakeholders had limited awareness of the regulatory sandbox concept. Concerns have been raised regarding the time required to establish regulations, knowledge gaps among stakeholders, data protection issues, and limited digital infrastructure in malaria endemic areas. Existing regulations have been found to be inadequate to accommodate disruptive healthtech for malaria. Nevertheless, through a collaborative process, stakeholders successfully developed a regulatory sandbox model specifically for e-malaria, with the crucial support of the Ministry of Health. The regulatory sandbox holds the potential for adoption in the Indonesian health system to address the limited legal framework and to facilitate the rapid and safe adoption of disruptive healthtech in support of the malaria elimination program. Through stakeholder involvement, guidelines for implementing the regulatory sandbox were developed and innovators were successfully invited to participate in the first-ever trial of a health regulatory sandbox for e-malaria in Indonesia. Future studies should provide further insights into the challenges encountered during the e-malaria regulatory sandbox pilot study, offering a detailed account of the implementation process.

Critically Analysing the Hype of Sandbox in the Context of Fintech

The UK’s financial market is under severe pressure as its proportion in the international financial market is steadily decreasing. Intending to alter this phenomenon and “encourage the development of its FinTech ecosystem,”[i] so that the UK can keep pace with global financial developments, “closing the gap which has opened up between the UK and other global centres,”[ii] the Financial Conduct Authority (FCA) proposed the regulatory sandbox in 2015, which is “an environment in which FinTech businesses can test innovative products, services, business models and delivery mechanisms that stem from engaging in regulated activities.”[iii] Due to its ability to encourage FinTech innovations in companies while preventing consumer disruption, “since its launch in 2016,”[iv] it has rapidly gained popularity and taken the world by storm. However, some have contended that such a hype of the regulatory sandbox contributes to the failure in seriously assessing the benefits and the potential downsides of the instrument. As a result, the regulatory sandbox has now become a controversial topic. Based on these controversies, this essay analyze the regulatory sandbox and the Hype surrounding it and take the stance that the hype about sandbox may not take into account the conditions under which it has been successful and exaggerates the advantages of sandbox, which is not conducive to an objective evaluation.

Futurity-led platform capitalism: the regulation of inclusive insurtech platforms

This article investigates international and national regulation of the recent foray by inclusive insurance firms into platform capitalism. It contributes to current debates on the governance of Fintech/insurtech in digital financial inclusion and platform capitalism. Drawing on Global Political Economy scholarship and John Commons’ concept of futurity, I argue that futurity drives the inclusive insurance market mediated by insurtech platforms. This process is performed within the regulatory sandbox, a dedicated legal framework allowing private firms to test innovative products and business models in a small-scale and controlled environment. The article draws on the analysis of legal documents, semi-structured interviews with key international and national insurance supervisors as well as participant observation in online conferences. The analysis offers empirical insights into the complexities of regulatory institutions to deepen our understanding of the global expansion of platform capitalism in inclusive insurance.

The EU DLT Pilot Regime for Digital Assets [pre-publication

On 23 March 2023, the DLT-Pilot-Regime came into force. It provides market operators the opportunity to offer blockchain-/DLT-based securities trading subject to full EU financial markets regulation. Although this piece of legislation has not attracted as much attention as the Regulation on markets in crypto-assets (MiCAR), the impact of the DLT-Pilot might be signification. In this article, we outline how the EU legislators have identified the shortcomings of current EU market regulation when applied to DLT-based trading, and addressed them one by one. If successful, the DLT-Pilot could become a ‘test kitchen’ for the development of DLT-based securities and crypto-asset trading in the EU. distributed ledger technology, DLT Pilot, financial instrument, MiCAR, regulatory sandbox, settlement system, multilateral trading facility

Forum shopping in regulatory sandboxes and the perils of experimental law-making

The gradual emergence of regulatory sandboxes in various jurisdictions has already triggered considerable attention of legal academia. Thus, academicians have addressed various legal frameworks, providing for regulatory sandboxes in the field of financial and energy technologies, artificial intelligence, medical products etc. In all these fields, regulatory sandboxes do currently serve as a tool for facilitating these new technologies, which could hardly emerge successfully under the rules of conventional legal frameworks. Beside identifying the advantages of regulatory sandboxes, various risks were also identified with respect to the prospective introduction of regulatory sandboxes in various fields of governance. This article aims to address the feature of ‘forum shopping’, that the spontaneous emergence of regulatory sandboxes might imply. The authors argue, that while such forum shopping will represent an inevitable implication of legal pluralism, one may also expect various attempts for the “passportisation” of regulatory sandboxes. At the same time, the authors aim to address a more theoretical question, to which extent are classical tenets of legal jurisprudence applicable to the experimental legislation?

Fintech adoption, the regulatory environment and bank stability: An empirical investigation from GCC economies

The study analyzes the impact of fintech adoption on the banking sector's stability in GCC countries from 2010 to 2022. The study also considers the role of fintech regulations in this framework. We construct an index of fintech adoption by banks by considering several factors such as banks' digital presence, mobile banking capabilities, support for open APIs, fintech partnerships, digital payment solutions, automation and artificial intelligence integration, innovation initiatives, user experience focus and embracing new technologies. The regulatory environment is measured through the existence or introduction of fintech-related regulations such as the regulatory sandbox. The findings imply that fintech adoption has reduced banks' stability in GCC. The fintech-stability relationship varies over various bank-specific and country-specific variables. For instance, large and well-capitalized banks are less likely to experience adverse effects of fintech adoption. Moreover, the negative impact of fintech on financial stability is lower for Islamic, foreign and government banks. In addition, banks operating in well-developed and more competitive banking sectors experience lower financial instability when adopting fintech innovation. We confirm these findings with an alternative indicator of fintech adoption. The study also discusses essential policy implications for the sample countries.

Going native? How crypto technology may help regulators

The crypto industry suffered a prolonged crisis in 2022. It is now at a turning point, as lawmakers around the world deploy new statutes aimed at curtailing endemic fraud, inadequate risk management, and bad governance. This is a net positive for the ecosystem – without legal certainty, it cannot flourish. In this paper, I argue that some crypto-native constructs may usefully complement traditional frameworks in the regulation of both crypto itself and the broader financial system. Protected environments, such as regulatory sandboxes and innovation hubs, should be leveraged to foster creative cooperation between authorities and the crypto industry.

관광규제 혁신과 규제샌드박스

As the government intensifies its efforts to foster the substantial growth of the tourism industry by innovating and reforming unnecessary regulations hindering its development, it is essential to pay attention to the increasing application of regulatory sandboxes in addressing key regulatory issues in the tourism sector. Notable examples include home-sharing services for both domestic and foreign travelers, mobile virtual reality (VR) experience services, platform services for taxi intermediation in the tourism sector, On-Off international traveler insurance services, and blockchain-based smart tour platform services. Recognizing the need for legal evaluation at the regulatory level, primarily focused on the Framework Act On Tourism and the Tourism Promotion Act, in support of the advancement of tourism regulation sandbox initiatives, this analysis delves into the legal framework of what is commonly referred to as the “Korean-style regulatory sandbox.” In light of these findings, several reasons necessitating improvements in the tourism regulation sandbox system are presented. Firstly, it emphasizes the need for specialized regulatory sandbox operations that consider the unique characteristics of the tourism sector. Secondly, considering that the Ministry of Culture, Sports, and Tourism, as the responsible authority, exercises significant regulatory authority in key areas such as the Tourism Promotion Act and the Game Industry Act, it suggests the consolidation of regulatory authorities to maximize the outcomes of the tourism regulation sandbox in the tourism sector. Thirdly, given the increasing number of legislative enactments for individual sectors under the regulatory sandbox, it highlights the significance of having dedicated organizations with expertise to systematically execute regulatory sandbox tasks in the tourism sector. Lastly, for effective responses to issues marked by regulatory conflicts, such as those seen in cases of ICT-based home-sharing services for both domestic and foreign travelers, it calls for an expansion of participation opportunities for stakeholders in the tourism sector. Considering these factors, it is not unreasonable to assert the need for the introduction of a regulatory sandbox system specifically applicable to the tourism sector to promote tourism regulation innovation. However, the establishment of a separate law for securing the legal basis of the tourism regulation sandbox may not be the most suitable approach, given the current regulatory landscape related to regulatory sandboxes. This is because there is not a high quantitative demand for regulations related to the sandbox. Therefore, considering these aspects, the most rational approach may involve partial revisions to the Tourism Promotion Act, which is closely associated with the regulations in the tourism sector, to introduce the necessary provisions for the implementation of the tourism regulation sandbox. If the essence of the sandbox is ultimately rooted in legislative feedback based on retrospective regulatory evaluations, it is quite reasonable to request the Ministry of Culture, Sports, and Tourism, which must take the lead in advancing tourism administration, to actively play a central role in the operation of the tourism regulation sandbox, based on the Tourism Promotion Act. Furthermore, the establishment and operation of the tourism regulation sandbox system for tourism regulation innovation should fundamentally be oriented toward fulfilling the diverse desires and expectations of the general public, the consumers of tourism services. This approach should cater to the needs and preferences of the general population in their enjoyment of tourism experiences.

Going down the local: the challenges of place-based net zero governance

Place-based decarbonisation is emerging as a significant element in the UK government’s net zero agenda, specifically through central government devolution deals. Such localised governance has the potential to reap social and economic benefits for communities whilst also potentially delivering on net zero goals. However, pre-existing institutional constraints and unresolved tensions remain, such as the uneven distribution of initiatives across areas and the fiscal limitations within local authorities. These could potentially exacerbate regional inequality rather than promote a just transition. This report characterises the current governance regimes and challenges to net zero delivery in four parts of the Midlands: Coventry, Nottingham, Leicester and Staffordshire. It highlights variation in local-scale action and identifies the constraints to multi-scalar governance for net zero. It recommends cultivating policy innovation, particularly to align planning with the net zero transition and identifies the potential role of regulatory sandboxes to this end as well as community ownership.

Role of Regulatory Sandboxes and MLOps for AI-Enabled Public Sector Services

This paper discusses how innovations in public sector AI-based services must comply with the Artificial Intelligence Act (AI Act) regulatory frameworks while enabling experimentation and participation of diverse stakeholders throughout the Artificial Intelligence (AI) lifecycle. The paper examines the implications of the emerging regulation, AI regulatory sandboxes and Machine Learning Operations (MLOps) as tools that facilitate compliance while enabling co-learning and active participation of multiple stakeholders. We propose a framework that fosters experimentation with automation pipelines and continuous monitoring for the deployment of future public sector AI-based services in a regulatory-compliant and technically innovative manner. AI regulatory sandboxes can be beneficial as a space for contained experimentation that goes beyond regulatory considerations to specific experimentation with the implementation of ML frameworks. While the paper presents a framework based on emerging regulations, tools and practices pertaining to the responsible use of AI, this must be validated through pilot experimentation with public and private stakeholders and regulators in different areas of high-risk AI-based services.

Analysis and Enlightenment of the "Regulatory Sandbox" Model for Financial Technology Innovation

Analysis and Enlightenment of the "Regulatory Sandbox" Model for Financial Technology Innovation