REGULATORY SANDBOXES: A GAME-CHANGER FOR NURTURING DIGITAL START-UPS AND FOSTERING INNOVATION
Article Sidebar
Main Article Content
Abstract:
Regulatory sandboxes allow digital start-ups to temporarily test new products without fully complying with regulations. This article defines regulatory sandboxes and examines their potential as innovation incubators that provide more flexibility than traditional regulatory frameworks. It provides brief historical context, followed by case studies of successful regulatory sandbox implementations in various countries. The benefits for digital entrepreneurs are discussed, including expedited product testing, easier access to investment, and the freedom to experiment. Challenges are also addressed, such as maintaining adequate consumer protections and a level playing field. The article concludes with suggested best practices for implementing regulatory sandboxes that serve the interests of both start-ups and the general public. Ultimately, appropriately governed sandboxes could significantly boost innovation.
Article Details
How to Cite:
References:
Kwok, W. M., Aquaro, V., Purcell, R., Chen, S., Hemmert, G., Palacin, V., Li, Q., & Yang, X. (2021). Sandboxing and experimenting digital technologies for sustainable development: From innovation hubs and policy experiments (Policy Brief No. 123). Future of the World. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/PB_123.pdf
Zavolokina, L., Ziolkowski, R., Bauer, I., & Schwabe, G. (2020). Management, Governance, and Value Creation in a Blockchain Consortium. MIS Quarterly Executive, 19(1), Article 3. Available at: https://aisel.aisnet.org/misqe/vol19/iss1/3
Jeník, I., & Duff, S. (2020). How to Build a Regulatory Sandbox: A Practical Guide for Policy Makers (Technical Guide). Consultative Group to Assist the Poor. https://www.cgap.org.
Soltanifar, M., Hughes, M., & Göcke, L. (2020). Digital Entrepreneurship. Impact on Business and Society. Springer. https://doi.org/10.1007/978-3-030-53914-6
Leckenby, E., Dawoud, D., Bouvy, J. et al. (2021). The Sandbox Approach and its Potential for Use in Health Technology Assessment: A Literature Review. Appl Health Econ Health Policy, 19(6), 857–869. https://doi.org/10.1007/s40258-021-00665-1
Thomas, J., & Harden, A. (2008). Methods for the thematic synthesis of qualitative research in systematic reviews. BMC Medical Research Methodology, 8(45). https://doi.org/10.1186/1471-2288-8-45
Leckenby, E., Dawoud, D., Bouvy, J., & Jónsson, P. (2021). The Sandbox Approach and its Potential for Use in Health Technology Assessment: A Literature Review. Applied Health Economics and Health Policy. https://doi.org/10.1007/s40258-021-00665-1
AllahRakha, N. (2023). AI and the Law: Unraveling the Complexities of Regulatory Frameworks in Europe. International Bulletin of Young Scientist, 1(2), https://doi.org/10.59022/ibys.115
Ahern, D. (2021). Regulatory Lag, Regulatory Friction and Regulatory Transition as FinTech Disenablers: Calibrating an EU Response to the Regulatory Sandbox Phenomenon. Eur Bus Org Law Rev, 22(3), 395–432. https://doi.org/10.1007/s40804-021-00217-z
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of Business Research, 122, 889-901. https://doi.org/10.1016/j.jbusres.2019.09.022
Thomas, A., Passaro, R., & Quinto, I. (2019). Developing Entrepreneurship in Digital Economy: The Ecosystem Strategy for Startups Growth. In B. Orlando (Ed.), Strategy and Behaviors in the Digital Economy. IntechOpen. https://doi.org/10.5772/intechopen.85423
Fahy, L. A. (2022). Fostering regulator–innovator collaboration at the frontline: A case study of the UK's regulatory sandbox for fintech. Law & Policy, 44(2), 162–184. https://doi.org/10.1111/lapo.12184
Alaassar, A., Mention, A.-L., & Aas, T. H. (2021). Exploring a new incubation model for FinTechs: Regulatory sandboxes. Technovation, 103, 102237. https://doi.org/10.1016/j.technovation.2021.102237
Feyen, E., Frost, J., Gambacorta, L., Natarajan, H., & Saal, M. (2021). Fintech and the digital transformation of financial services: Implications for market structure and public policy (BIS Papers No. 117). Bank for International Settlements and the World Bank Group. https://www.bis.org
Hellmann, T., Montag, A., & Vulkan, N. (2022). The Impact of the Regulatory Sandbox on the FinTech Industry. Saïd Business School, University of Oxford and NBER; Saïd Business School, University of Oxford and Research Institute of Industrial Economics (IFN)
Allahrakha, N. (2023). Balancing Cyber-security and Privacy: Legal and Ethical Considerations in the Digital Age. Legal Issues in the Digital Age, 4(2), 78-121. https://lida.hse.ru/article/view/17666
Truby, J., Brown, R., Ibrahim, I., & Parellada, O. (2022). A Sandbox Approach to Regulating High-Risk Artificial Intelligence Applications. European Journal of Risk Regulation, 13(2), 270-294. doi:10.1017/err.2021.52
Goo, J. J., & Heo, J.-Y. (2020). The Impact of the Regulatory Sandbox on the Fintech Industry, with a Discussion on the Relation between Regulatory Sandboxes and Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 6(2), 43. https://doi.org/10.3390/joitmc6020043
Lesher, M. (2020, October 13). Bringing new digitally enabled products and services to market: Sandboxes and the role of policy experimentation. VOXEU. https://cepr.org/voxeu/columns/bringing-new-digitally-enabled-products-and-services-market-sandboxes-and-role-policy
Göcke, L., Soltanifar, M., & Hughes, M. (Eds.). (2020). Digital Entrepreneurship: Impact on Business and Society. Springer International Publishing. https://doi.org/9783030539146
Ancygier, A., Wilson, R., Petroni, M., Waterton, O., Gonzalez, C., Vasilj, L., Quill, E., Rabiee, S., Singh, M., Schmidt, S., Kurre, C., Coleman, W., Ramalope, D., Waldmann, C., Martini, L., Jakob, M., Görlach, B., Gardiner, J., Park, A., & Hayakawa, H. (2022). What can the EU learn from non-EU countries on its path to climate neutrality? Deliverable 3.4. Climate Analytics & Ecologic Institute.
Zetzsche, D. A., Buckley, R. P., Arner, D. W., & Barberis, J. N. (2017). Regulating a Revolution: From Regulatory Sandboxes to Smart Regulation. Fordham Journal of Corporate and Financial Law, 23, 31-103. University of Luxembourg Law Working Paper No. 006/2017, University of Hong Kong Faculty of Law Research Paper No. 2017/019, UNSW Law Research Paper No. 17-71, Center for Business and Corporate Law (CBC) Working Paper Series 001/2017. Available at SSRN or http://dx.doi.org/10.2139/ssrn.3018534.
Stampatori, D., Rossetto, N., Willeghems, G., Kessels, K., Lacerda, M., Corceiro, B., Galeano, J. A., Jakovljevic, D., Ritzek, J., Pappa, S., Janssen, R., & Zoulias, E. (2023). Recommendations for customer engagement strategies (Version 1; OneNet Report No. D11.5). OneNet. https://doi.org/957739
Economic Commission for Latin America and the Caribbean (ECLAC). (2018). Data, algorithms and policies: Redefining the digital world (LC/CMSI.6/4). United Nations.
Joh, E. E. (2017). The undue influence of surveillance technology companies on policing. New York University Law Review Online, 92(19), 20. Retrieved from https://www.nyulawreview.org/wp-content/uploads/2017/08/NYULawReviewOnline-92-Joh_0.pdf.
Sanger, C.S. (2020). Inclusive Pedagogy and Universal Design Approaches for Diverse Learning Environments. In C. Sanger & N. Gleason (Eds.), Diversity and Inclusion in Global Higher Education (pp. [pages]). Palgrave Macmillan. https://doi.org/10.1007/978-981-15-1628-3_2
Ahern, D. (2021). Regulatory Lag, Regulatory Friction and Regulatory Transition as FinTech Disenablers: Calibrating an EU Response to the Regulatory Sandbox Phenomenon. European Business Organization Law Review, 22(1), 1-38. https://doi.org/10.1007/s40804-021-00217-z
Brenner, B. (2018). Transformative Sustainable Business Models in the Light of the Digital Imperative—A Global Business Economics Perspective. Sustainability, 10(12), 4428. Danube University Krems, Department for Management and Economics. https://doi.org/10.3390/su10124428