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EghtesadOnline: The National Informatics Corporation, the Central Bank of Iran's arm for developing financial solutions, is finalizing the long-awaited regulatory sandbox, the company's CEO said.

"The government tasked the CBI to work on a regulatory sandbox…Shaparak Company, as the supervisory body of the payment network, was tasked to conduct studies on the mechanism of the sandbox. The project is now in the final phase," Way2pay quoted Reza Abdollahi as saying. 

"The project was to be launched in summer; however, it was postponed as the new government took office. Over the past few months we put in extra effort to upgrade the platform and redesign its frontend."

A regulatory sandbox is a controlled environment supervised by a public authority in which startups and incumbents are allowed to test innovative products and services and face less risk of penalty for non-compliance with the regulation in exchange for certain safeguards – such as accepting a limited number of clients or intermediating limited transactions.

A key objective of the sandbox is to foster innovation by facilitating access of fintechs to funding in the early stages of development. As fintechs offer new products in high regulatory uncertainty, they face serious challenges of asymmetric information and often struggle to raise capital to develop products and grow.

The Security and Exchange Organization, the regulatory body of Iran's capital market, last month unveiled a regulatory sandbox to help ease the development of third-party platforms.

Back in November 2018, the government required the CBI to establish a regulatory sandbox in line with plans to promote fintechs.

The CBI said earlier that it would launch the regulatory sandbox in the spring of 2021. Delay in creating platforms for implementing the new check law is said to be the reason behind the delay.

A regulatory sandbox is a must for technological development in the financial industry. Given the high potential and robustness of the fintech sector, the CBI should cut red tape and stop wasting time in unveiling the long-awaited platform, experts say.

Elaborating on possible challenges ahead of implementing the platform, Abdollahi said, "We have not yet worked on promoting the advantages of the sandbox. Success of the project depends on a shift in the approach of developers who should start using the sandbox in the process of developing financial applications."

 

CBI sandbox