BlockchainBusiness & Finance

11 Countries Join Hands to Form ‘FinTech Sandbox’

As fintech progresses everyday, so does the need for regulations. On Tuesday, a network consisting of 11 countries was announced to form an alliance in order to encourage the growth of fintech companies. The main aim of the agreement is to allow these companies to perform trials for their products beyond their own borders, and of course under strict regulations. Hence it is being referred to as a ‘Global Sandbox’.

What is a Sandbox?

In the world of computer science, a sandbox is a closed and controlled testing environment specifically designed for safe experimentation with the web or software projects.

The sandbox concept is also being used in the digital economy as regulatory sandboxes, which are primarily the testing grounds for new business models that do not come under or are not protected by the existing regulations, or supervised by regulatory authorities.

The United Kingdom has been on the forefront of regulating as well as promoting its fintech sector.Therefore, it was the United Kingdom’s Financial Conduct Authority (FCA) that announced the Global Financial Innovative Network (GFIN) with 11 other regulator members.

GFIN Membership

  1. Abu Dhabi Global Market (ADGM),
  2. Autorité des marchés financiers (AMF)
  3. Australian Securities & Investments Commission (ASIC)
  4. Central Bank of Bahrain (CBB)
  5. Bureau of Consumer Financial Protection (BCFP, USA)
  6. Dubai Financial Services Authority (DFSA)
  7. Financial Conduct Authority (FCA, UK)
  8. Guernsey Financial Services Commission (GFSC)
  9. Hong Kong Monetary Authority (HKMA)
  10. Monetary Authority of Singapore (MAS)
  11. Ontario Securities Commission (OSC, Canada)

According to the FCA report,

The GFIN is designed to be an inclusive community of financial services regulators and related organizations. The eventual membership of the GFIN that take this project forward is still to be determined. The named organizations above are committed to exploring the idea further, but the consultation process will help inform any future involvement. Similarly, regulators not named may decide to get involved in the future, or after the formal launch of the GFIN.

The membership might be open to further regulators but it is predicted that the network will overseen by a much smaller group of members. A chair will also be present, however the chair is not envisioned being authoritative rather as more of a coordinator.

Functions of the GFIN

According to the FCA, the GFIN will have three major functions

  • Act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models.
  • Provide a forum for joint policy work and discussions.
  • Provide firms with an environment in which to trial cross-border solutions.

The idea of the ‘Global Sandbox’ was coined in FCA’s last consultation earlier in February 2018. Which resulted in a positive feedback, ultimately leading to the formation of the GFIN.

The Need For a Global Sandbox

The world of the 21st century is a globalized world, a world that is heavily interconnected and a world where nothing is restricted to particular borders. The soaring trend of blockchain-based technologies is in a process of constantly revolutionizing different aspects of traditional fields. In order for us to move forward in the on going process of change, well thought out and planned measures need to be taken, to promote fintech all the while keeping it in check.

The major emerging innovation trends within financial services are increasingly global, rather than domestic, in nature. For instance, big data, artificial intelligence (AI), and blockchain-based solutions are being developed and deployed simultaneously in different financial markets. Since there is a general trend towards developing these digital solutions, now is a time to consider how to begin building new ways to share experience and manage the questions that emerge.

Read the GFIN document.

Coinciding with its launch, the group has published its consultation paper and is seeking public feedback up to mid-October, this year.

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Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Email: abeer@blockpublisher.com or contact the editor at editor.startups@blockpublisher.com

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