Regulatory Sandbox

Regulatory Sandbox

We exist to…

Provide a space for safe experimentation

Innovation means pushing boundaries. The Regulatory Sandbox provides market innovators with an opportunity to test new products and services that push the boundaries of existing regulation, all under the responsible supervision of relevant regulators.
Market innovators must apply to the Regulatory Sandbox. Accepted participants test their product or service within parameters established by the IFWG and are expected to report on testing progress at regular intervals. Learnings from testing will help regulators determine if and how policies and regulations must change to promote responsible innovation in the market.

Should you apply to the Regulatory Sandbox?

In order to be eligible for the Regulatory Sandbox, the following initial criteria must be met:
  • The innovation to be tested must be intended for deployment in the South African market
  • The innovation to be tested must not clearly fit within the existing regulatory framework or it challenges the existing regulatory framework
  • The innovation must be beneficial to consumers or the market at-large (e.g., for Business-to-Consumer companies – lower prices, increased competition, improved access/financial inclusion; for Business-to-Business companies – lower costs, increased efficiency, improved compliance)
  • The innovation must be significantly different from other offerings in the market
  • The innovation must be ready to be tested, including fully developed technology, sufficient funding to cover the full testing period, and secured partnerships (if required for testing)

IFWG Regulatory Sandbox – First cohort​

The Intergovernmental Fintech Working Group received a total of 52 applications during the application window for the Regulatory Sandbox which closed on 15 May 2020. The 52 applications received represented a broad range of financial services activities of which 34 were related to payments, 7 savings and deposits, 5 lending, 3 investments, and the remaining 3 identified as “other”.

The IFWG is extremely pleased with the large number of applications as it is a testimony to the vibrancy and dynamism in the South African fintech landscape. The approval process between the multiple regulators has taken us longer than expected. This was largely driven by the need to clarify treatment of these complex cases which do not currently fit neatly within regulation. As a result, we have adopted a staggered approach to allow the innovators who are ready to start testing to proceed before the full cohort is finalised. The table below reflects the innovators who are currently testing. Once the cohort approval process is finalised, the final list of innovators accepted into the Regulatory Sandbox will be communicated publicly through an IFWG press release.

The IFWG reiterates that entrance into the sandbox does not indicate a change in a firm’s licensing status or signal tacit or implicit approval of the product or service under consideration. It does, however, offer both the regulators and the innovators an opportunity to consider the regulatory fit of emerging innovation. At the conclusion of testing, the insights gained should provide clarity on how such innovation could be treated from a regulatory perspective in future, thereby promoting regulatory certainty.

In most cases testing is expected to last 6 months and the innovators have worked with the various regulators to determine appropriate testing parameters, consumer protection measures and continued compliance with all regulatory requirements during the testing period. Dates for the next intake’s application window will be communicated closer to the end of cohort 1.

Innovators currently testing as part of cohort 1

Innovator’s core business
What is in the sandbox
The People’s Fund
Crowd-investing platform that facilitates raising capital for Small and Medium-sized Enterprises (SMEs) with consumers willing to invest. The investments are used to fund SMEs’ purchase orders, products or assets.
The sandbox seeks to clarify the treatment and appropriate framework for the intermediation of crowd-investing platforms.
Still have questions on the Regulatory Sandbox? Download our FAQs here.