There are currently 400 FinTech companies in Spain, which is one of the reasons why the transformation of the financial sector is accelerating. With the Sandbox Law, all this acceleration of the sector is regulated. However, what characteristics will supervisory authorities consider when choosing projects? What is the admission criteria for the Regulatory Sandbox?
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We found the answer to the need to create such a testing environment with the passing of the “Digital Transformation of the Financial Sector” Act, which came into force on 15th of November 2020 and regulates the operation of the Regulatory Sandbox.
The approval of a test environment is the perfect push to achieve greater regulatory certainty while providing a wider range of technology products and services to customers without any risk.
Admission criteria for the Regulatory Sandbox
Regulatory Sandboxes are not limited to a specific type of activity. Therefore, projects related to banking, insurance, operating in capital markets or others are eligible.
Eligible projects must be innovative.
Business models must be sufficiently mature and in position to be tested in the market, so this test environment is not considered an incubator or accelerator. In other words, projects must present a prototype in the Regulatory Sandbox that offers a minimum of functionality that can prove its usefulness.
According to the admission criteria, an application must be submitted together with a supporting project Memorandum explaining the content of the project and the reasons why the project should enter the Sandbox.
Regulatory Sandbox testing conditions
The conditions for testing will be established in advance and agreed between the regulator and the project developer.
Regulatory Sandbox Abandonment
Participating users may leave at any time, and in the event that they or third parties suffer any damage or harm, the responsibility will be borne exclusively by the promoter.
Principle of proportionality
The principle of proportionality will be applied by the supervisor to adapt the characteristics of the project to the regulation, as entry to the Sandbox does not imply exemption from legal requirements.
Grant an authorization or license
The aim of the Regulatory Sandbox is to grant an authorization or license for projects to operate in the market, once they have passed the tests and their activity has been approved.
In conclusion, as we have seen in previous publications, the approval of the Spanish Regulatory Sandbox has countless advantages. It is worth mentioning that the Sandbox could generate almost 4,000 jobs and 1 billion euros in the Spanish market. Moreover, 38 countries have already implemented similar projects in their legal systems, with Asia standing out with the largest number of test spaces and the United Kingdom, a pioneer in this initiative and one of the most successful cases.
Fulfilling the admission criteria for the Regulatory Sandbox is very important for projects to be able to apply for access to the controlled space and receive a favorable pre-assessment.
Innovative projects aiming to be part of the Spanish Sandbox should be prepared with sufficient time in advance to submit their proposals when Treasury opens the call for cohorts to come.
Learn about the official participation guidelines for the Spanish Regulatory Sandbox. Leer más
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