The Central Bank of Iran's executive board has approved a framework for the regulatory sandbox.
The sandbox will operate under the supervision of a strategic council in charge of setting regulations for the operation of the sandbox, CBI website reported on Saturday.
Supporting innovative ideas, easing the process of offering financial services and optimizing the process of regulating fintech startups will be the key features of the regulatory sandbox.
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 a highly uncertain regulatory climate, they face serious challenges of asymmetric information and often struggle to raise capital to develop products and grow.
The National Informatics Corporation, the Central Bank of Iran's arm for developing financial solutions, is tasked to develop the sandbox,
NIC officials said earlier that the project was in the final phase. "The project was to be launched in summer, but 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," on official said.
Back in November 2018, the government instructed the CBI to establish a regulatory sandbox to help promote fintechs.
The CBI was to unveil the regulatory sandbox in the spring of 2021. Delays in creating new platforms for implementing the new check law reportedly delayed the project.
The Security and Exchange Organization, the capital market regulator, last month unveiled a regulatory sandbox to help ease the development of third-party platforms.
The informatics corporation is a holding company co-owned by the CBI, the Bank of Industry and Mine, Bank Saderat and Bank Melli. It is in charge of developing electronic banking solutions and financial infrastructure.
The number of fintech startups has rapidly increased in Iran in recent years and are required to build partnerships with financial institutions.
Published numbers suggest that lenders and innovators have managed to get along relatively well. According to the CBI, 26 fintech hubs are currently active in Iran.
Almost 87% of Iranian banks and credit institutions have established their own innovation centers. This has helped banks and innovators to reach mutual understanding about [improving] the financial market and the fintech ecosystem.
