Babbitt's first launch | Deng Jianpeng: The Enlightenment of the International Practice of "Regulatory Sandbox" to the Blockchain Industry

This article was published in the Journal of Shaanxi Normal University (Philosophy and Social Sciences Edition), No. 5, 2019

Author: Deng Jianpeng Lixue Ning

(School of Law, Central University of Finance and Economics, Beijing 100081, China)

Abstract : It is difficult for legislation and legal supervision to keep pace with the rapid development of financial technology, especially the blockchain industry. To this end, the UK is the first in the world to advocate “regulatory sandbox” to encourage the development of financial technology and control risks. In recent years, the practice of monitoring sandboxes in various countries shows that the supervision sandbox is effective in saving time and cost, helping companies to obtain financing, promoting innovative products to enter the market, and protecting consumers, but at the same time, it faces many limitations. Drawing on the practice of extraterritorial supervision and sandboxing represented by the United Kingdom, China can get the following inspirations in regulating financial technology risks: changing regulatory thinking, defining regulatory subjects, protecting consumer interests, grasping the degree of regulatory lenientness, and encouraging cooperation among companies. Win, while at the same time aiming to avoid the limitations of the regulatory sandbox.

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Keywords : regulatory sandbox, financial technology, blockchain, UK Financial Conduct Authority, regulatory technology, ICO

Fund Project : Research on the major issues of philosophy and social science research of the Ministry of Education, “Research on Risk Prevention and Diversified Supervision Mode of Internet Finance” (Project Approval No. 15JZD022).

I. Introduction

The financial technology industry, including the blockchain, has played a huge role in promoting economic development, improving people's living convenience and reducing costs. Researchers believe that financial technology companies provide a wide range of financial services in various fields, including asset management, capital pooling, and virtual currency. Financial technology has reduced costs for society and broadened access. [1] The so-called financial technology, according to the “Finance Technology Description and Analysis Framework Report” issued by the Financial Stability Board, the lead agency of global financial governance in March 2016, its definition of financial technology means “promoting through technical means” Financial innovations form business models, technology applications, and processes and products that have a significant impact on financial markets, institutions, and financial services (FSB, 2016). At the same time, however, researchers also believe that financial technology also brings new and different risks compared with traditional financial institutions. Some of these systemic risks are more worrying than traditional financial institutions. [2] 1-13

Previously, most of the existing financial legal systems in various countries were mainly used to regulate the traditional financial industry. For emerging industries, such as P2P online lending, blockchain and ICO, virtual currency payment and transaction, and stable currency (such as FACEBOOK plans to be issued in 2020). Libra coins, that is, LIBR), crowdfunding and smart investment, etc., cause many problems, but they have no time to take care of them. In recent years, although some countries have created new laws on some sub-sectors of financial technology, ^[42] regulate and strengthen legal supervision, [3] 84 However, a large number of new sub-sectors are rapidly generating or diversifying. For example, after Chinese regulators began to strengthen supervision and regulation of P2P online loans in 2016, some online lending platforms were once transformed into cash loans, which triggered new risks. It is obviously difficult to continue legal supervision. Therefore, some researchers believe that the use of traditional regulatory strategies for new technology ecosystems has proven to be conceptually wrong. [4]

There is an eternal contradiction between the rapid differentiation of financial technology segments and the incomplete legal system. In the face of these emerging industries where changes do not exist, the law has its own characteristics, solidification and often lag behind the development of the times. Therefore, the so-called regulatory technology that uses technical means, especially information technology (IT) to regulate financial markets, has received attention. Among them, the regulatory sandbox launched by the UK in recent years has great value and reference significance for controlling new risks in the field of financial technology and continuing to encourage technological innovation. Some researchers even believe that the regulatory sandbox may be the best way to support Regulatory Technology 3.0. [5]

The Regulatory Sandbox is the UK's first regulatory tool to provide a secure environment that allows financial technology companies entering it to test their innovative products, services and business models, to promote effective competition in UK financial technology, encourage innovation and stimulate market vibrancy Protect consumer rights. For the UK Financial Conduct Authority (FCA) and the companies under test, this is a new market and regulatory experiment and an important regulatory innovation in the field of financial technology.

The concept of “regulatory sandbox” was first proposed by the British government in March 2015. In November 2015, the UK Financial Conduct Authority (FCA) issued the “Regulatory Sandbox Report” [6], introducing the regulatory sandbox system and its feasibility. . [7] 338-357 to June 2016, the regulatory sandbox system began to enter practice. The UK's regulatory sandbox mechanism was launched, which has attracted the attention of many countries around the world. Countries such as Singapore, Hong Kong, and Australia have adjusted the local sandbox mechanism based on the local situation and introduced corresponding mechanisms.

The regulatory sandbox mechanism has received close attention and research from many Chinese scholars in recent years. [8] 22-35 Most of the researches have introduced the essential characteristics of the UK regulatory sandbox, the operation mode or the basic process, [9] 88-100 to compare the regulatory sandboxes of different countries or regions and explore China's Develop paths and provide relevant advice, and more. [10] 94-110 The results of the practice of the super-territorial sandbox operation represented by the United Kingdom and the lack of existence began to be announced since 2018, although some studies occasionally mentioned the part, [11] 60-79 but mainly stayed at the preliminary introduction. Most of the research has not yet been thoroughly analyzed. [12]

At the same time, the leaders of some financial regulatory agencies in China mentioned the reference significance of the supervision sandbox on some occasions. [13] Some scholars further believe that the system is similar to the existing “pilot” model in China. [14] In July 2017, six social organizations including the Guizhou Blockchain Industry Technology Innovation Alliance, the Blockchain Finance Association, and the Guiyang Blockchain Innovation Research Institute released the Blockchain ICO Guiyang Consensus at the seminar. One of the most important aspects is to establish and continuously improve the “blockchain ICO sandbox plan” to regulate the real economy of China by regulating blockchain digital assets and ICO (blockchain entrepreneurship project first token financing) financing activities. service. The “Blockchain ICO Sandbox Project” will carry out ICO innovation pilots, set thresholds for investors in the regulatory sandbox, implement an approval system for ICO projects, grant ICO projects exemptions, and encourage ICO projects based on districts. Blockchain technology accelerates development and eliminates unnecessary concerns about regulation. [15] At about the same time, Ganzhou City, Jiangxi Province also launched a blockchain supervision sandbox industrial park. [16] However, the domestic blockchain supervision policy has undergone tremendous changes, and this innovative pilot has not been completed. At present, the sandbox gardens in the above two places are on hold. At the same time, there are many shortcomings in the domestic blockchain supervision policy, which fail to effectively resolve the related risks. [17] 31-50 Therefore, explore the practice of the newly supervised sandbox represented by the United Kingdom, as well as the representative practice of sandboxing in other regions, and summarize the lessons that can be learned from China and the lessons to be avoided. Whether it is a deficiency in the existing academic research or a reference in the field of practice, it is of great significance to China.

Second, the connotation and practice progress of the supervision sandbox

In the context of the rapid development of financial technology, the UK's first regulatory sandbox system has attracted many countries and regions to try, such as Australia, Singapore, Switzerland, Hong Kong, Thailand, Malaysia, Canada, South Korea, India, etc. country. Given the UK's consistent global leadership in financial services, Singapore and Hong Kong are Asia's emerging global financial centers, and Canada has unique practical experience in regulating sandbox policies. This article selects the four elements of the regulatory sandbox. Test practice is the main research object.

(1) The connotation and practice of the British regulatory sandbox

As a leader in the global financial services sector, the UK is very pioneering in encouraging financial innovation and innovation in regulatory tools. In order to stimulate market vitality and protect consumer rights, the British government first proposed the concept of “regulatory sandbox” in March 2015. In November of the same year, the UK Financial Conduct Authority (FCA) published its “Regulatory Sandbox Report”. This was introduced in detail, and officially entered the practical stage in June of the following year. In October 2017, the “Review of the Sandbox Lessons and Lessons Learned Report” [18] released feedback on the experience and lessons learned from the first and second phases of the sandbox test. According to data from the official website of the Financial Conduct Authority (FCA), as of the end of April 2019, the testing process for the regulatory sandbox has progressed to the fifth phase. Among them, 18 companies in the first phase were selected, 24 companies in the second phase were selected, 18 companies in the third phase were selected, and 29 companies in the fourth phase were selected. The current fifth phase of the regulatory sandbox received 99 test applications from the UK and overseas, and 29 companies were selected. Most applicants are companies that are looking to test wholesale and retail banking, and some large companies, such as Standard Chartered Bank, plan to tokenize retail deposits so that consumers can benefit from long-term deposits and flexible withdrawals. [19]

From the perspective of access standards, because the UK regulatory sandbox is quite inclusive and does not restrict the applicant's business type and scale, it is widely applicable and involves a wide range of industries and product types. The UK Financial Conduct Authority (FCA) has developed specific eligibility criteria for entering the regulatory sandbox, which was originally announced on June 16, 2016, including market scope, innovation, consumer interest, sandbox demand, Applicants are prepared for the five eligibility criteria, and corresponding positive and negative indicators are set to screen out highly innovative financial technology businesses that are ready to be used in the UK market. In addition, a successful applicant needs to complete a test plan ^[43] , and then submit it to the UK Financial Conduct Authority (FCA) by a case-officer. The internal approval process can be used to participate in the test. This process requires approximately 10 week. [20]87-93

At present, based on the lessons learned from the practice of sandboxing in the first two phases of the FCA, the FCA has increased the fluency of the sandbox testing process to achieve better results, and has added several new requirements to applicants. : (1) If the applicant needs the cooperation of the partner (such as the outsourcing technology provider), the applicant must find the partner and sign the contract in advance. ^[44] (2) Applicants must be registered or authorized in the UK to participate in the test, and have a certain size of headquarters and employees in the UK. (3) Applicants must have a UK bank account to participate in the sandbox test. (4) To apply for a restricted authorization, submit the relevant information. The FCA recommends that applicants read the following key documents: (a) PERG 2.7 Supervisory Syllabus to help the company clarify which actions are regulated during the sandbox test. (b) A barrier to entry that helps the company to clearly define the conditions that must be met for authorization. (c) A guide to apply to become a payment institution and to apply to become an electronic money institution (pay special attention to the requirements for security measures). ^[45]

In terms of industry types, the participants in the supervision of sandbox testing are mainly financial technology companies, which include retail banking, general insurance, wholesale, retail investment, retail loans and pensions. [18]8 Business types involve blockchain-based payment services, regulatory technology, insurance, anti-money laundering (AML), biometric digital ID, smart contracts, and KYC certification (know-your-customer) and many more. [21] Geographically, applicants for regulatory sandbox testing come from all parts of the UK, including Scotland, East Midlands, South East England, and beyond the UK, including Canada, Singapore, and the United States. In the early stage of the implementation of the regulatory sandbox, the main distribution of applicants in proportion from large to small is Greater London, the United Kingdom ^[46] , the southeastern United Kingdom, Scotland, the southwest of England and East Midlands,[18]9 The main reason is that a large number of the world's leading financial institutions, circulating capital and technical talents have gathered in Greater London, making it a major concentration of financial technology activities. However, this trend is gradually changing. For example, in the second phase of the test, 35% of the companies are located outside of London, which is a significant increase compared with the 25% of the first phase of the test.

In terms of company size, startups account for the largest proportion, followed by large companies and finally small and medium-sized companies. [18] 9 Regardless of the size and maturity of the company, the UK Financial Conduct Authority (FCA) has indicated that it will support innovative companies without discrimination. However, it is clear that startups and unauthorised companies are more keen to participate in the supervision of sandbox testing, as the UK Financial Conduct Authority requires companies with regulated business in the UK to be authorized or registered in advance. Therefore, it is difficult for a startup or an unlicensed company to expand its business, so it turned to the help of the sandbox. Such companies participate in testing mainly for the following purposes: 1 application for authorization; 2 testing for innovative products or solutions; 3 for solving the problem of whether the company's business requires authorization and what kind of authorization is required. [18]87-93

The Financial Conduct Authority (FCA) of the United Kingdom proposed the idea of ​​building a global regulatory sandbox in early 2018. Based on this, the Global Financial Innovation Network (GFIN) was officially launched by global financial regulators and related organizations in January 2019 to help Financial technology companies conduct cross-border testing in different jurisdictions and establish platforms for exchange of experience and cooperation between national regulatory agencies. Companies involved in cross-border testing need to meet the regulatory requirements of the target jurisdiction. For example, companies wishing to test in the UK, Australia and Hong Kong need to independently meet the eligibility criteria set by regulators in these jurisdictions. Unless the regulator agrees to extend the deadline, cross-border testing typically lasts for six months, and each regulator is only responsible for testing within its jurisdiction and considering the risks involved and developing appropriate safeguards. As of the end of April 2019, the Global Financial Innovation Network has participated in 35 international organizations, including the United Kingdom, the United States, Australia, Canada, Singapore, Hong Kong, etc. Currently, the global financial innovation network has initially screened 44 test applications. Eight of them were selected, and member states are exploring the use of regulatory sandboxes as a force to support cross-border testing. [twenty two]

(II) The Connotation and Practice of Singapore's Supervision Sandbox

Since the release of the “Financial Technology Supervision Sandbox Guide (Draft for Comment)” in June 2016, the Monetary Authority of Singapore has begun to explore the regulatory sandbox system. Singapore has always been committed to the construction of a smart country and maintains the development of cutting-edge technology industries. A keen attitude, so its regulatory sandbox model is mainly aimed at the financial technology industry, compared with the British sandbox mechanism open to all “disruptive innovation” companies, its scope of application is narrower, the qualification standards are more specific, and therefore more Targeted.

Since Singapore introduced the regulatory sandbox for the financial technology industry, more than 30 innovative companies have applied for testing. It is worth mentioning that half of the sandbox test applications received by Singapore do not require sandboxing, and many companies do not need any regulatory exemptions [23], which reflects to some extent the background of financial technology development, Singapore There is a relatively favorable regulatory environment. In August 2017, PolicyPal took the lead in completing the test. The company is a brokerage firm that uses artificial intelligence to simplify and digitize insurance, and customers manage and purchase insurance policies through applications. During a six-month sandbox test, PolicyPal tested technology in Singapore and tested the distribution model. At the end of the test, PolicyPal became a licensed insurance broker, providing products and services to individuals and SMEs to help analyze, manage and ultimately optimize the customer's insurance portfolio. [24] Companies that subsequently entered the sandbox were also completing tests, with types of insurance involving insurance, fund management, currency exchange, and remittance services. During the testing process, Singapore has relaxed the regulatory limits for applicants. For example, insurance brokers may not apply RBC2 ^[47] and other regulations related to the insurance industry; direct insurance can not be applied during the test period. Singapore Deposit Insurance Corporation (SDIC) The “Policy Holder Protection Plan”; ^[48] Fund management, currency exchange, and remittance services may not be applicable to the dispute resolution of the Financial Industry Dispute Adjustment Center (FIDReC).

At present, Singapore is committed to promoting the process of entering the sandbox testing innovation program. On November 14, 2018, the Monetary Authority of Singapore issued a document proposing to create a pre-defined regulatory sandbox to open up a quick channel for applicants (Sandbox Express) and conducted a one-month consultation. [25] Singapore has conducted a number of individual-specific experiments since the start of the sandbox test in 2016. Now based on this, the concept of establishing a regulatory sandbox is proposed to speed up the testing process and save the application cost as an existing regulatory sandbox. In addition to the system, the pre-defined sandbox is only suitable for financial products and services with lower risks. The HKMA has developed guidelines and operational frameworks for pre-defined regulatory sandboxes, and has proposed pre-defined sandboxes for insurance brokers ^[49] , ROM ^[50] and remittance services ^[51] , each of which contains The boundaries, requirements and relief programs, the suitability of applicants and the innovation of financial services are the two criteria for access to predefined sandboxes. There are five main issues involved in the questionnaire for public comment, mainly seeking advice on the initial predefined sandbox, comments on the proposed predefined sandbox guidelines and operational framework, and three pre-defined definitions. Sandbox views.

(3) The Connotation and Practice of Hong Kong's Supervision Sandbox

The Hong Kong Monetary Authority (HKMA) launched the Financial Technology Regulatory Sandbox (FSS) in September 2016. In the sandbox, banks and technology companies collaborate to conduct tests on a specific number of customers without full compliance with the Hong Kong Monetary Authority. The regulatory requirements of HKMA). This will help banks and their partner technology companies to accelerate the introduction of innovative products, but not to circumvent regulation. At the end of 2017, the Hong Kong Monetary Authority upgraded it to FSS 2.0 based on its experience in operating FSS.

FSS 2.0 has the following new features: 1 Establish a financial technology regulatory chat room ^[52] to provide timely feedback to banks and technology companies in the early stages of financial technology projects; 2 technology companies can communicate directly with the HKMA through chat rooms without having to Through the bank; 3 the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC), the Insurance Authority (IA) sandbox are connected ^[53] , providing a "one-click" for cross-sector financial technology products "The way to cut." As of the end of March 2019, FSS has tested 48 new technology products, including biometrics, soft tokens, distributed ledger technology, and regulatory technology. Of these, 32 have been tested and innovative products have been introduced. [26]

When Hong Kong initially borrowed from the UK to supervise the sandbox, it was only targeted at local banks in Hong Kong, which restricted the qualifications of other types of financial institutions to participate in the sandbox. Therefore, the scope of coverage was relatively small and the product types were relatively concentrated. With the advancement of the regulatory sandbox application, Hong Kong has made corresponding adjustments to the above situation. On September 29, 2017, the Hong Kong Securities Regulatory Commission (SFC) and the Insurance Regulatory Authority (IA) launched their respective regulatory sandboxes. The SFC Regulatory Sandbox [27] aims to encourage market practitioners in the securities and futures sectors to use innovative technologies for regulated activities, to engage in close dialogue with the SFC, use sandboxes to detect and prevent risks in advance and bring more investors select. The Insurance Technology's Insurtech Supervisory Sandbox [28] aims to provide some regulatory flexibility for insurers to test innovative technologies, introduce innovative products, and help the Insurance Regulatory Authority improve its regulatory approach. To promote the development of insurance technology and to build Hong Kong into an Asian insurance technology centre, the Hong Kong Insurance Regulatory Bureau has also established an Insurance Technology Promotion Group. At present, in order to help establish the RegTech ecosystem, the Hong Kong regulatory sandbox provides a greater opportunity for banks and technology companies to test regulatory technology projects. In addition, in response to the proposal to establish a global regulatory sandbox in the UK in early 2018, Hong Kong On August 7, 2018, the global financial innovation network plan was announced. When the organization was formally established in 2019, it became one of the founding members. It promoted the cross-border supervision of financial innovation and cooperated with other regulatory agencies to create an environment conducive to cross-border testing. active.

(4) The Connotation and Practice of Canadian Supervision Sandbox

On February 23, 2017, the Canadian Securities Regulatory Authority (CSA) introduced regulatory sandbox regulation measures and listed several business models for CSA regulatory sandboxes, including crowdfunding portals, based on encrypted digital currency or distribution. Venture capital for book-based technology, trading with artificial intelligence, etc. Enterprises that want to apply for CSA sandbox supervision should contact the local securities regulatory agency. After the regulatory body has reviewed its qualifications, the CSA regulatory sandbox will be applied to the enterprise. CSA officials may request to apply for on-site environmental testing, business planning and Investor protection demonstrations (such as investor risk minimization measures). [29] CSA evaluates projects applying for encrypted digital currency on a case-by-case basis, and licensed companies can legally operate their products or services in Canada. Since the UK first introduced the sandbox, the mechanism is mostly used in related financial technology innovation industries such as banking and payment. It is rare for CSA's regulatory sandbox to be used to encrypt digital currency-related businesses. CSA said it will use sandbox supervision to help financial technology companies develop products related to encrypted digital currencies. [30]

Canada was one of the first countries to apply the regulatory sandboxing innovation regulation model to the ICO project. In September 2017, the ICO project Impak Finance passed the regulatory sandbox test of the Quebec Financial Market Regulatory Authority (AMF). The Impak token issued by the Impak Finance platform was classified as a security, and Impak Finance became the first legal ICO project in Canada, but AMF did not require it to be registered as a stock exchange and waived the requirement that the project applicant should attach a prospectus. [31] Some Canadian regulators have shown positive attitudes towards ICO and encrypted digital currencies, attracting ICO entrepreneurial projects around the world.

Third, the main technology and market impact of supervision sandbox testing

The key to effective competition is to promote valuable technological innovation. Therefore, countries that develop sandboxing mechanisms pay more attention to stimulating enterprises to invest in next-generation technologies, inject new vitality into the market, and bring better experiences to consumers and other financial service users. Given that the current practice of regulatory sandboxing is not yet fully mature and the market is expected to change, it is too early to make a quasi-determination of the overall impact of the regulatory sandbox, but the positive role of regulatory sandbox testing in driving market competition is Traceable, and as better products and services enter the market, competitive pressures are expected to improve the consumer claims of existing companies.

(1) Main technologies for monitoring sandbox testing

Emerging technologies play a key role in providing innovative products and services that improve existing products and services by improving quality or lowering prices, as well as expanding consumer access channels. By analyzing the practice of sandboxing in major countries, we have combed several new technologies that are currently focused on surveillance sandbox testing.

(1) Distributed ledger technology (DLT)

Distributed ledger technology (also known as blockchain technology in China) has developed rapidly. Most experts believe that the technology has unlimited prospects and helps the company better meet the needs of the market and consumers. Distributed ledger technology can be applied to a variety of financial services, such as identity management, remittances, interbank payments, and settlement. The technology currently plays an important role in regulatory sandbox testing in the UK, Singapore, and Hong Kong. status.

Distributed ledger technology has great potential. First, distributed ledger technology has a natural advantage in reducing the cost of financial services, improving the security, trust, and efficiency of services among participants. Second, distributed ledger technology can significantly increase transparency and visibility, and is therefore expected to support effective reconciliation and auditing. Third, distributed ledger technology can reform traditional payment methods and methods. Although DLT technology is well worth looking forward to, some DLT innovations are currently limited to research laboratories or proof of concept (PoC) stages due to interoperability, security, scalability, cost-effectiveness, and regulatory factors, [32] Limited to an uncertain regulatory environment, and the lack of a corresponding legal framework in most countries, DLT faces some legal risks and is currently not fully compatible with the high demands of investors and users on financial market infrastructure.

(2) Online platforms

Compared with traditional processes, online platforms can communicate information to relevant transaction participants more efficiently and transparently. Companies are gradually improving the traditional model and moving to online platforms to improve financial services. In the regulatory sandbox, companies have tested whether the online platform can simplify the initial public offering (IPO) issuance process; there are companies that specifically test whether the online platform can provide more convenient and safe interaction by providing a technical framework to collect more Valuable information and engaging investors; and company testing uses an online platform to help small and medium-sized companies access foreign exchange options at a lower quantity and cost than existing products, simplifying the process of currency hedging and making it easy for users to purchase products that meet their needs. .

(3) Application Programming Interfaces (APIs)

Application interface technology can help startups connect with other financial services organizations to provide consumers with relevant financial information more securely and conveniently. For example, a company development online platform aggregates users' common accounts, credit cards and pension balances. After using the API to connect with relevant financial service institutions, consumers can directly access a series of related financial service products through a platform to gain in-depth understanding. Its own financial situation helps the company to increase the awareness of market products and bring a better user experience.

(4) Biometrics

Biometric technology is a system integration of various parts such as computer, Internet, security, monitoring, and management systems. It can intelligently perform identity verification with high speed and accuracy. For example, in the sandbox, companies test the application of the technology on the distributed ledger technology platform. Consumers use biometric technology to pay, log in and verify their identity. Face recognition technology can also be applied to risk analysis assessments conducted by financial advisors.

(5) Smart investment (Robo-advice)

Smart investment is an emerging field in the consulting market in recent years. Although the generated recommendations are generated by tools, relying on manual preset programs or manual review results, more intelligent applications are still in the experimental stage. For the risks that may arise from smart investment, additional security measures can be taken beforehand, such as inviting experienced financial consultants to attend, and the financial adviser can review the smart investment based on the underlying algorithm before submitting the proposal to the customer. Can be modified if necessary. In the world, smart investment is generally incorporated into the original investment supervision framework and the registration system is adopted. However, some countries, such as the United Kingdom, Australia, and Singapore, have included them in the regulatory sandbox, allowing companies that have not obtained the corresponding license to test their products or service.

(2) Regulating the market impact of the sandbox

Most of the national regulatory sandboxes provide applicants with a relatively tolerant trial and error platform through regulatory exemption or restrictive authorization. Although the regulatory sandbox mechanism is still in the process of exploration, observing the existing practice results, the market brought by it The impact has already begun to appear.

(1) Improve the efficiency of products entering the market

First, the policy support provided by the regulatory sandbox can effectively reduce the compliance costs of financial technology companies. For example, the Hong Kong regulatory sandbox set up a chatroom to communicate directly with the financial technology company. The UK regulatory sandbox urges the company to communicate with the FCA's subject matter experts through a case-officer ^[55]. Companies understand how to apply regulatory frameworks, reduce time to market, and reduce spending on external regulatory consultants. In addition, for large companies, regulatory sandboxes can speed up the company's governance and product development cycles, enabling them to test innovative solutions faster; for start-ups, the regulatory sandbox can give it a restrictive mandate, allowing it to Participate in the test within the limited scope, and then apply for exemption without the need to apply for a new authorization if the relevant conditions are met ^[56] . In the regulatory sandbox, countries have given participants the corresponding regulatory exemptions according to their national conditions. This flexible regulation is conducive to financial technology companies to save compliance costs.

Second, the trial and error platform provided by the regulatory sandbox can help applicants adapt to the market in advance. The market environment simulated by the regulatory sandbox can help applicants assess the attractiveness and commercial viability of new products or services they develop in small-scale tests, and then the applicant can adjust the business model based on the feedback received. Regulators can also use sandboxes to test the feasibility of the underlying technology while ensuring that appropriate safeguards have been taken. Applicants' lessons learned during the sandbox testing process can be applied to the subsequent stages of product development, helping to reduce the cost of product launches and entering a larger market than untested. For example, the British company Issufy, which initially tested in the regulatory sandbox with Arranging Deals in Investments, later adjusted its business model to provide technical services to buyers such as investment banks, asset management and financial advisors. [18]87-93

(2) Helping financial technology companies to expand financing channels

As financial technology has changed the traditional financial format, it is inevitable that there will be conflicts with the regulatory framework. The certainty of supervision is an important factor for investors to consider when investing in related industries. Participating in the supervision of sandbox projects carried out by official institutions can appease investors to a certain extent, increase trust and attract continuous investment. In addition, because of the risk concerns, investors usually do not favor financial technology companies that are not yet authorized. Therefore, for small-scale startups, the rules exemption or restrictive authorization related to the supervision of sandbox applications can be Provide more certainty to potential partners and investors. For example, at least 40% of companies in the UK's regulatory sandbox phase 1 test received investment during or after the test. [18] Singapore's first PolicyPal company to complete the sandbox test was not authorized and had financial problems at the beginning of the venture. After the six-month test period of the sandbox, PolicyPal obtained multiple rounds of financing and has successfully developed into a license. Insurance broker.

(3) Strengthening consumer rights protection measures

When the UK first initiated the sandboxing mechanism, it listed the protection of consumers' legitimate rights and interests as one of the main objectives. Later, when countries or regions borrowed from the sandbox model, they also paid attention to the construction of consumer rights protection measures. In practice, the UK Financial Conduct Authority (FCA) works with applicants and consumers to develop business models and develop a standard set of security measures and related additional security measures for sandbox testing, such as requiring all in the sandbox. The company has an exit plan in place to ensure that testing can be closed at any time to minimize damage to consumer rights. During the testing process, existing companies have initiated exit plans due to lack of consumer appeal. Other countries have also made corresponding provisions on consumer rights protection measures, including the need to protect consumers' right to know when conducting sandbox tests, soliciting consumer consent and informing consumers of potential risks and corresponding compensation.

Fourth, the analysis of the limitations of the supervision of sandbox international practice

The practical effect of the regulatory sandbox shows that its effectiveness in encouraging financial technology innovation is certainly gratifying, but it cannot be ignored that the environment provided by the supervision sandbox test does not meet all the needs, and it is at a certain distance from the real market environment. Therefore, there are some limitations in the face of complex actual situations.

(1) Obtaining bank service difficulties

The main challenges faced by start-up companies developing new financial products based on new technologies are authorization and funding. Although national regulatory sandboxes can appropriately relax the regulatory limits for applicants and encourage startups to innovate, the funding problems faced by start-up companies are only The regulatory sandbox mechanism is still difficult to resolve. The reasons behind this are very complicated, especially because some new products of financial technology companies are more prone to money laundering and terrorist financing risks (such as full-anonymous virtual currency business based on blockchain technology), plus the bank's strategic business decisions and profitability for customers. Banks' review of emerging company loans is very strict considering factors such as capacity, credit risk assessment and overall compliance costs. For example, some banks in the UK have adopted “de-risking” to shut down banking services for certain types of customers. Such large-scale denial of account services will lead to significant industry barriers and inhibit the vibrancy of market competition, especially for small companies. In the case, the impact of the lack of banking services is more serious than that of large enterprises. [33] Emerging financial technology companies in other countries, especially those that use distributed ledger technology to move toward payment institutions or e-money institutions, are also generally faced with the inability to access banking services, such as the Reserve Bank of India (RBI). In 2018, it issued a document prohibiting banks from providing services to startups engaged in encryption services, even though the cryptographic assets project was explicitly listed as a negative indicator in the regulatory sandbox draft issued in 2019. [34] Due to the relevant ban issued by the People's Bank of China in the blockchain financial risk area since 2017, Chinese banks and third-party payment institutions are not allowed to provide funds transfer services to encrypted digital currency trading institutions, if the regulatory sandbox is introduced into China Such problems will also exist in China. In addition, there are significant differences within the banks regarding the company's access criteria for accessing banking services.

(2) The accuracy of the test results is limited

A number of tests in the Regulatory Sandbox are designed to analyze customer absorption and commercial viability, and then evaluate the market prospects of products and services, and regulators can also make adjustments in practice to make regulatory rules more rational. However, due to a variety of realistic factors, the regulatory sandbox may not be able to achieve the ideal state of vision. First, the development of the specific framework of the regulatory sandbox depends on the professional level of the regulatory body, which increases the uncertainty caused by human factors. The misjudgment of the supervisors may lead to the deviation of the test results. Second, the startup enters the test. At the same time, there is often a lack of mature customer base. Most countries adopt stylized conditions in the practice of monitoring sandboxes to prevent risk expansion, such as limiting the scope of testing, the number of users and the total amount, so the small range simulated by the sandbox is monitored. There is a big gap between the market environment and the real market. Can financial technology products meet the needs of complex and diverse users after they move out of the regulatory sandbox? Can you identify and address greater market risks? Can the results achieved with the help of the regulatory sandbox continue beyond the sandbox? These practical problems do not necessarily have a definitive answer, but they all affect the accuracy of the test results. Unlike the United Kingdom, Singapore, or Hong Kong, China, for China, a large economy and a large population, the good results of testing in a very limited environment, such as sandboxing, are extremely complex in the market for all people. Is it possible to get the same? We have doubts.

(iii) Facing technical challenges

Innovative financial products and services developed by financial technology companies often require underlying technology support. For example, some companies tailor their products and services by acquiring and analyzing consumer transaction information to better meet customer needs. However, the corresponding supporting facilities are still not perfect. To effectively use relevant data, financial technology companies need to access and share such data safely and efficiently, but in fact, it is difficult for companies to directly access financial institutions that have such data and to gain access and share. stand by. In addition, the application of new technologies has certain operational difficulties. For example, the UK regulatory sandbox found in test practice that even companies with very good new systems and technical operations spend more time than expected in integrating APIs. A series of financial institutions are connected through APIs to provide users with comprehensive financial products. However, API technology is still not mature in the financial services industry, which makes integration difficult during the test period.

(4) The authorization problem remains to be solved

The sandbox mechanism requires applicants to meet relevant conditions, such as having the necessary capabilities and financial capabilities to maintain normal operations and protect consumer rights. Since the business structure of companies participating in sandbox testing may differ from previous models, such companies Conducting assessments is often more complicated than traditional companies. Be cautious, even if the applicant meets the relevant conditions, an in-depth evaluation is required if necessary, or it is required to provide additional information that is not normally required in the authorization process. Therefore, even if the regulatory sandbox relaxes the initial regulatory requirements, some emerging technology companies still have many obstacles in obtaining authorization, and it is particularly difficult to enter small-scale testing. For example, some companies in the sandbox must obtain authorization to become insurance companies if they want to insure insurance products, but these companies often fail to meet the high requirements of initial supervision during the test period to become insurance companies unless the business model becomes an insurance intermediary and insurance company. Cooperative underwriting insurance products.

(5) There are potential risks in the competition of the regulatory authorities

The fierce competition in global financial technology has placed higher demands on the level of supervision of various countries. Since the introduction of the regulatory sandbox in the UK, other countries have used this model to encourage the development of emerging financial technology. Researchers say that the inclusive regulatory platform provided by the regulatory sandbox promotes financial innovation to a large extent compared to the inherently strict regulatory rules, but it cannot be ignored that financial technology is also developed with complex and hidden systems. Sexual risk, the regulatory sandbox mechanism must establish strict access and exit criteria, otherwise the risk generated by one country may spread to other regions, and whether countries can strictly play the role of goalkeeper in the fierce global competition affect the stability of global finance . [35]

Take the regulation of the blockchain field as an example. On September 4, 2017, Chinese regulators prohibited the financing of blockchain (ICO) and virtual currency transactions. However, due to the technical characteristics of the blockchain with peer-to-peer trading, this has led to a dilemma in a single country: a large number of Chinese blockchain project startup teams moved to countries or regions with very loose overseas supervision and financed ICOs of Chinese citizens. Due to the practical difficulties of cross-border judicial coordination and regulatory enforcement, there are still a large number of violations of the rights and interests of Chinese citizens in such illegal business and overseas virtual currency transactions.

V. Enlightenment from the supervision of sandbox practice to China

As the UK's first regulatory tool, the regulatory sandbox reflects the UK's moderate tolerance for innovation in financial technology and its tendency to adapt to regulation. This is why the mechanism has been followed by many countries and regions. We believe that Chinese regulators can consider further reference to the regulatory sandbox mechanism to protect consumers' rights and interests, try to apply and promote financial technology applications within a limited scope, and explore the application prospects of various segments of financial technology. In order to ensure the protection of consumer rights and risk control as the bottom line, the regulatory authorities will grant temporary licenses to applicants within a certain scope and encourage relevant enterprises to innovate. The international practice of supervising the sandbox is a valuable exploration. We should gain experience from its effectiveness and limitations, improve the level of China's financial technology supervision and supervision, and avoid the existing lessons.

(1) Respecting market changes and optimizing regulatory policies

The practice of regulatory sandboxing in the UK, Singapore and Hong Kong shows that many developed countries and regions are continuing to promote the development of the financial technology industry in recent years. Whether a country's financial technology industry has a competitive advantage is closely related to the relevant regulatory mechanisms and legal policies of the country. An effective and excellent system will inevitably help the industry to develop more rapidly while reducing financial risks. In short, good regulatory policies and systems are the core competitiveness of a country's financial technology development. Therefore, the regulatory policy is fundamental and overall for the development of the domestic industry, which largely determines the future of financial technology. In areas such as the United Kingdom, Singapore and even Hong Kong and Gibraltar, ^[57] due to factors such as small geospatial or economic volume, these countries and regions are deeply worried and crisis-conscious, thus controlling financial risks and protecting consumer rights. Under the bottom line thinking, they have actively promoted the development of financial technology with an open and developmental regulatory attitude, and hope to attract global entrepreneurs and lead the development of global financial technology. [36] 134-159

In contrast, some of China's regulators are deeply worried about financial technology risks, and stimulated by some extreme negative events (such as “e-rental”, campus “naked loans” and blockchain ICO financing), resulting in financial technology. In the regulatory field, certain "one size fits all" bans and sports law enforcement thinking, in the extreme aversion of regulators' financial risks, regulatory policies and sports law enforcement are facing many difficulties. [16] 31-50 Although these policies may be beneficial to temporarily control risks and maintain financial market stability in the short term, they will not effectively promote the development of financial technology and control risks in the long run. Instead, they will force some promising innovative technologies or teams to move. Overseas, seeking development opportunities may further reduce the global competitiveness of China's financial technology.

Science and technology experts believe that the 21st century is facing the singularity approaching – the rhythm of human creation technology is accelerating, and the power of technology is growing at an exponential rate, which initially grows at a very small rate and then explodes at an incredible rate. [37] 1 In the social science concept of Fukuyama's “end of history”, the concepts of “freedom” and “democracy” are universally accepted by the world. No matter what form the society in which people live, the process of this theory cannot be changed. According to recent social science and technology changes, a new generation of scholars believe that the biggest problem we face now is ecological collapse and technological subversion. Liberalism does not give a clear answer. The scientific and technological revolution may soon make billions of people unemployed, creating a large number of useless classes, bringing about social and political turmoil that the existing ideology cannot cope with. [38] 15-16 The author cuts off that human society is experiencing “from the end of history” to “singularity approaching”. In the near future, human society will face changes far beyond history. If this judgment is established, the speed of technological advancement is surpassing that of any previous era, and its impact and impact on human society (including financial markets) will be unprecedented. The entire financial technology will be an important chapter in the process of this change. This requires regulators to adjust their inherent thinking, to humble, learn, explore and embrace technological change, moderately tolerate risks, and improve regulatory techniques and regulatory approaches to adapt to changes in the field of financial technology. In this regard, we have repeatedly believed that regulation, relevant legislation and governance need to respond to new changes in the financial market in a timely manner. The logic for the necessary supervision of financial activities is mainly based on the consideration of stability and order of financial markets, and it should be strictly limited to moderate Within the scope, otherwise it will reduce financial efficiency. [39] 67-76 This requires regulators to change their thinking, adhere to the bottom line thinking, moderately refer to the regulatory sandbox, and combine China's national conditions, existing "pilot" mechanisms and effective rules in the market to promote this. Over the past 100 years, the over-intervention of the state legal system and administrative supervision has led to the alienation of some rules (customary or customary laws) in the market, excessive dependence on rigid state power, and the market is prone to some negative effects. This state has not been obtained. Full reflection of scholars. [40]182-192

Second, we should grasp the degree of lenient supervision. Regulators should not be too strict in the supervision of financial technology. They should give opportunities for trial and error and development of new things. If a simple banned mode of regulation or “sports law enforcement” is adopted, it will inevitably inhibit innovation and change in the industry and seriously undermine entrepreneurship. The normal expectations of the market and the stability of the rule of law. For such thinking in the field of financial technology in the past few years, China's regulatory agencies should be deeply convinced. [34] 67-76 In the risk management, we must consider the stability of the market, but also consider creating a healthy competitive environment for the market. At the same time, supervision and law enforcement should not be too lenient. Some law enforcement agencies do not file a lawsuit against violations of consumer (investor) rights in the blockchain field on the grounds that there is no explicit law. This is likely to cause market confusion and even Further breeding a large number of violations and illegal acts, chaos.

As a statute country, China's regulation of financial technology tends to be based on statutory law. For a long time, some scholars have typical "legal omnipotence" ideals and even fanaticism. [41] The cruel reality of 43-56 is that financial technology is changing with each passing day, and the natural lag characteristics of statute law make it difficult to effectively deal with risks in the field of financial technology. In contrast, the regulatory sandbox has a function similar to active, predictive supervision, which can partially avoid the state that the regulator is too poor to cope.

(2) Defining the regulatory body and determining the supervisory duties

The UK's regulatory sandbox is primarily responsible for the UK Financial Conduct Authority (FCA). Since 2013, the Financial Services Authority (FSA) has been replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). FCA is responsible for regulating the behavior of all financial services industries, such as banks, insurance, and investment industries, including securities and futures, to promote effective competition, maintain market order, and protect consumer rights. In view of the fact that the UK's financial services are very sound and sound, we can carry out some of the lessons that suit our national conditions. The industry involved in the supervision sandbox test is very extensive and the test objects are mostly new technology and new models. Considering the current status of the supervision of the country and the lag of the law, if you want to learn from the sandbox model, you must first clear the regulatory body. Under the current Chinese financial supervision system, it seems more appropriate to lead the launch of a similar mechanism by the People's Bank of China. The People's Bank of China has set up an Internet finance rectification office. In recent years, it has dominated the Internet financial rectification work. The Bank Insurance Supervision and Management Committee is more focused on the supervision of the two traditional financial services of banks and insurance. After establishing a responsible body similar to the regulatory sandbox, it should determine the regulatory responsibility, set standardized access standards, clarify regulatory requirements, maintain market order, and prevent certain companies from exploiting legal loopholes.

(3) Strengthening the protection of consumers' rights and interests

China's current financial market environment is still not perfect for the protection of consumers' rights and interests. Especially with the development of new technologies, it has brought convenience services and has also produced various types of scammers. Even a large number of financial technology and internet finance fields have emerged. Criminal and criminal acts. The field of financial technology is mixed and even brutally grown. Some enterprises have seriously damaged consumer rights and disrupted the healthy market environment. This situation has caused some Chinese regulators to fail to take into account the protection of consumer rights when they issue certain regulatory documents and bans (such as in the blockchain and online lending sectors). The interests of the consumers (investors) are affected. damage. The UK Financial Conduct Authority pays great attention to the protection of consumer rights when conducting sandbox testing. For example, it is necessary to formulate appropriate consumer protection measures in advance, and require the company to make an exit plan before entering the test. Such mechanisms are also in Hong Kong and other places. Something is reflected.

Due to the immature business innovation brought by new technologies, consumers are faced with higher risks in this environment. Therefore, the practice of foreign consumer protection measures is worth learning. Specifically, first of all, to ensure that consumers have full right to know, explain that the test project is currently only in the experimental stage, because it is not mature enough to trigger various types of risks, then select the willing consumers, select appropriate risk preferences and Responsible consumers participate in the test; secondly, establish timely feedback mechanisms and specific compensation standards for potential risks of consumers; finally, applicants who require sandbox testing are provided with relevant certificates to ensure that they have a commitment when the consumer rights are damaged. ability.

(4) Encourage cooperation between companies

Unlike traditional finance, financial technology combines financial products and services with other industries, and finance is moving toward more liberalization. The combination of emerging technologies such as cloud computing, big data and distributed ledgers with finance is both an opportunity and a challenge, but emerging technology companies often do not open up the market, lack a consumer base, and financial companies face high technology R&D if they want to transform. Cost, so the partner model in the UK regulatory sandbox test is available for our reference. There are good prospects for cooperation between technology companies and financial companies. Financial companies can expand their business space for technology companies, and technology companies can save research and development costs for financial companies to achieve a win-win situation. For example, a bank works with a small technology provider to develop applications to encourage customers to save, and for example, start-up insurance intermediaries work with insurance companies to test innovative solutions. For start-ups, the partnership model helps them reach a larger customer base, test in a real-world environment, and leverage the resources, experience and knowledge of large companies. For large companies, working with startups to help them quickly innovate and improve their products, saving time and money on their own development.

(5) Avoiding shortcomings in sandbox supervision practice

If China introduces a regulatory sandbox system, it will also face the limitations of the practice of sandboxing in the UK and other places mentioned above. Therefore, it is especially necessary to take proactive and forward-looking supervision. For example, digital currency is difficult to obtain banking services for companies testing such businesses due to the potential risk of money laundering. Risk management can be carried out through anti-money laundering monitoring technologies such as customer screening, transaction monitoring, and reporting information, without having to eliminate risks like the UK. De-risking to reduce risk in batches. Attracting customers is a challenge for startups, and can work with companies that already have a large customer base to achieve a win-win situation. Access to consumer data and authorization issues also requires regulators to give the test company a certain degree of authority based on the specific circumstances under the premise of good risk control. For technical problems in the industry, such as integrating APIS, the government can provide partial support. The gap between the simulated market environment and the real market environment may lead to deviations in the test results. To improve the accuracy of the surveillance sandbox test results, we can start with the following points: First, filter consumption according to the audience of the product or service of the participants. And control the number of consumers to a reasonable range to help participants to obtain a precise customer base. Second, to ensure an effective test period, it is more appropriate to adopt a flexible period than a fixed period, which helps the company to be at a substantive level. Complete the test; third, strengthen internal communication and industry discussions, build a platform to share experiences and learn from each other, and brainstorm and replenish the shortcomings of the simulation environment and testing process.

In addition, the supervision sandbox focuses on specific analysis of specific situations, and different enterprises are treated differently. The regulatory measures in the sandbox vary greatly from company to company. This is very different from the model and unified regulatory policy, and will increase in practice. The cost of the regulator. There are a large number of China's financial technology start-up companies, especially the start-up companies are not good enough and the administrative resources are limited. In addition, the trial of sandbox supervision tends to be "one-on-one" or "one-in-one", and different test items are adopted. In the form of supervision, each project must pass the sandbox test alone. For the large-scale innovation and entrepreneurship of the public, this will result in huge regulatory costs that may exceed the capacity of the regulator.

We believe that, first of all, these costs can be shared by the state and companies willing to participate in the sandbox test; second, the regulatory body can standardize the general matters to reduce the cost of manpower supervision; Standards to screen qualified applicants; set classification criteria for selected companies, dispatch appropriate liaison personnel on a group basis; third, try to use the predefined regulatory sandbox to be implemented in Singapore as a supplement to the sandbox system, Small, simple process of certain types of financial products or services pre-set sandbox, this will help financial technology companies to apply for entry into the regulatory sandbox in a shorter time, and can understand the regulatory arrangements in advance, based on this, develop a program, enhance testing Coordination, effectively saving the cost of both parties; Fourth, the regulatory agencies need to pay attention to lessons learned during the experiment process, and timely release the valuable information or typical test cases extracted without any trade secrets. The same kind of innovative companies involved in the test provide reference, forming a “more than one belt” effect . On the one hand, it can alleviate the market competition contradiction brought by the supervision sandbox ^[58] , and bring real effective competition to financial technology; on the other hand, the ultimate beneficiaries of the supervision sandbox include not only the company but also the consumers, thus ensuring information equality. Sharing, let the market go to the victory, rather than the government to cultivate elites, in order to ensure that consumers maximize the benefits of financial technology innovation.

Finally, when the regulatory authorities refer to and draw on the regulatory sandbox, they should also pay attention to the following issues: First, regulators should be committed to creating a system of fair competition, especially in the legal system because of differences in ownership of the owners. Differentiate and encourage true financial technology innovation. Second, train professional supervisors with financial technology knowledge and international perspectives to sum up international experience and improve supervision. Third, regulators can implement specific modes of monitoring sandbox operations in accordance with the actual conditions of China's financial technology industry.

Financial technology, changing with each passing day, no waiting for me! In particular, the calculation of the Libra coin initiated by the Internet giant Facebook, the future impact may be immeasurable. If its operation is mature, it will bring huge impact to China's related industries (such as third-party payment) and regulatory policies (such as cross-border asset transfer supervision, foreign exchange purchase restrictions) and so on. China should promptly introduce a regulatory sandbox, flexible supervision, and maintain the commanding heights of financial technology, especially the blockchain industry.

Foreign Practices of Regulatory Sandbox and Its Inspiration to China Deng Jianpeng, Li Xuening (Central University of Finance and Economics, Law School, Beijing, 100081)

Abstract:Only legislation is not enough to control the risk of Fin-tech. The United Kingdom firstly put forward the concept of Regulatory Sandbox in the world and actively introduced the project to encourage the development of Fin-tech, which is effective in reducing the Time and cost of getting innovative ideas to market, helping facilitate access to finance for innovators, testing products and introducing them to the market, and building appropriate consumer protection safeguards. simultaneously, it's hard to address all the challenges the sandbox firms may face. The paper puts forward some suggestions to the regulatory of financial technology that we should innovate ways of supervision, clarify the supervision identity, strengthen the cooperation of firms, exercise a rational supervision, protect consumer interests, and avoid the limitations of Regulatory Sandbox.

Keywords : Regulatory sandbox;Financial technology; Blockchain; FCA; Regtech; ICO

【references】

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[2] Li Wenhong, Jiang Zeshen. Fin Tech Development and Supervision: A Regulator's Perspective [J]. Financial Supervision Research, 2017 (3).

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【Note】

[42] For example, in 2012, the United States passed the “Business Startup Promotion Act” (referred to as “JOBS Law”), which made many amendments to the original securities law. The third chapter is the special “Crowdfunding Law”. [[42]]

[43] The content of the test program includes test objectives, number of participants, success criteria, potential risks, and consumer protection measures. [[43]]

[44]] Of the 50 applicants in the first two sandboxes, 41 were in the test, and 9 were missed because they were not prepared for the necessary resources for testing. The lack of partners is one of the important reasons. [[44]]

[45] Note: This restricted authorization option does not apply to companies that want to obtain a bank license. [[45]]

[46] In order to attract investment and promote cross-border projects in financial technology, the UK regulatory sandbox is equally open to foreign financial technology companies, but its innovative products need to be applied to the UK market. [[46]]

[47] In 2005, Singapore's risk-based capital regulatory framework (RBC) for insurance companies and the new generation of risk-based capital regulatory framework (RBC2), which was formally implemented on January 1, 2017, required the minimum market entry requirements for insurance companies. The paid capital is 10 million Singapore dollars (about 45 million yuan); the solvency supervision target is 120%, that is, the actual capital of the insurance company is greater than or equal to 120% of the minimum capital requirement. According to the requirements of the two frameworks, Policypal wants to enter the insurance market, the actual capital is at least 12 million Singapore dollars (about 60 million yuan). [[47]]

[48] ​​However, after exiting the sandbox, the full contractual obligations to the policy owner are still fulfilled. [[48]]

[49] Under the Singapore Insurance Act (IA) Chapter 142, he is engaged in direct insurance brokerage, general reinsurance brokerage and life reinsurance brokerage. [[49]]

[50] may operate and operate an exchange business in accordance with Chapter 289 of the Singapore Securities and Futures Act (SFA). [[50]]

[51] Remittances may be made in accordance with Chapter 187 of the Singapore Currency Exchange and Remittance Practices Act (MCRBA). [[51]]

[52 companies can enter the chat room by e-mail, video conferencing or face-to-face meetings. The purpose of the chat room is to provide regulatory feedback to banks and technology companies at the beginning of the new technology application concept, avoiding the road and speeding up the launch of new technologies. Product time. [[52]]

[53] The Hong Kong Monetary Authority, the Securities and Futures Commission and the Insurance Authority have launched their respective regulatory sandboxes. [[53]]

[54] Canada has applied the regulatory sandbox to the blockchain sector, which is only less than half a year earlier than China, but the former operates with a stable sustainability and the latter is interrupted in the short term. [[54]]

[55] The FCA assigns a case-officer to each successful company to be responsible for communication, assistance, and supervision. [[55]]

[56] After the first phase of testing, most of the restricted licensing companies have obtained full authorization. [[56]]

[57] The Gibraltar Region regulates bills through distributed ledger technology (ie, blockchain) and became effective in early 2018. [[57]]

[58] Companies entering the sandbox can gain some of the support and convenience provided by the regulators, thereby gaining a dominant position in the market and unfairness to other competitors not participating in the sandbox test. This is not a regulatory sand. The original design of the box. [[58]]

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