NBU Launches Regulatory Sandbox to Test Innovative Products

The NBU is launching a regulatory sandbox for the testing of innovative products, services, technologies, and tools.

The regulatory sandbox will enable authorized providers of financial or payment services to test new cutting-edge and innovative financial and payment products in real-market conditions in a limited environment under the regulator’s supervision (in particular, under certain restrictions and quotas).

"The primary task of the regulatory sandbox is to promote the development of FinTech and innovative products in the financial and payment markets. At the same time, its launch should stimulate competition, improve the quality of financial and payment services, and deepen the regulator’s dialogue with market participants, especially regarding the development of FinTech regulation," said Oleksii Shaban, NBU Deputy Governor.

How to participate in the regulatory sandbox

At this time, only the market participants that are already authorized to provide financial or payment services in line with Ukrainian laws will be able to participate in the testing of innovative products in the regulatory sandbox.

Furthermore, before being tested, an innovative product must undergo a preliminary assessment by the regulator, and the applicant must agree to the testing procedure itself in order to be granted the status of a regulatory sandbox participant.

Specifically, to be eligible for a regulatory sandbox test, an innovative product must meet the following requirements:

1. No similar products must exist, or the proposed product must significantly outperform the characteristics of its existing peers.

2. The product’s introduction must not lead to violations of legislation that protects business competition.

3. There must be no legal bans on the product’s introduction.

4. No specific standards in Ukraine’s legislation must exist that make it impossible to introduce the product in the market outside the regulatory sandbox.

How to apply for a regulatory sandbox test

To have an innovative product tested, a market participant must take the following steps:

• go to the information portal https://promo.bank.gov.ua/sandbox
• download an application for participating in the regulatory sandbox
• fill the application out, and (the following is optional) prepare documents that confirm the information provided in the application
• use a qualified electronic signature to sign the application and the documents attached to it
• email everything to: [email protected].

After that, the NBU will evaluate the applicant. The central bank will review the application and decide whether it is feasible to let the applicant’s innovative product participate in the regulatory sandbox. In making such a determination, the NBU will be guided by its professional judgment. The regulator will take into account its assessment of the financial and payment markets’ conditions and the effectiveness and risks of providing such services by means of innovative technologies and tools.

If the application is approved, the NBU will conclude a testing agreement with the applicant. This document will stipulate detailed terms of the applicant’s participation in the regulatory sandbox and outline the procedure for testing the innovative product. The agreement will also include agreed-upon information about the specifics of the test and the rights and obligations of the parties.