According to a new report released by the Kenya Capital Markets Authority (CMA), since March 2019, the country’s regulatory sandbox has now received 24 applications, inquiries and proposals. Of this total, only 7 companies were admitted into the sandbox, and “there are more in the final stage of the review (now).” However, out of the seven companies that were certified, only two completed the testing phase , And plans to launch the product soon.
Regulator and innovator relationship
At the same time, CMA acknowledges that this regulatory sandbox provides it with job opportunities and opportunities to learn from innovators. In the document titled “Regulatory Sandbox Milestone Report”, the CMA stated:
It is too early to assess the impact of the “regulatory sandbox” on the capital market, but it is important to note that the sandbox allows the Authority to work with innovators to incorporate appropriate consumer protection safeguards into new products and services .
In addition, the regulator said it now knows that close interaction with innovators during the testing process helps to “get new knowledge from the market and better understand the product”.
However, in the same report, the CMA gave a summary of the challenges faced during the test period, which is expected to last 12 months. For example, by interacting with innovators who specialize in blockchain and encryption solutions, CMA has observed that “insufficient information about the risk areas in this field” has proven to be a key challenge.
In addition, the report also listed the CMA’s “lack of internal capacity to review these types of applications” and “the central bank’s opposition to the issuance of cryptocurrency”, as well as other major challenges.
Regarding the lessons learned during this period, the CMA said that it now understands that regulators need to “work closely with applicants.” The reason for this is “mainly because fintech companies are the owners of these ideas, and they understand these ideas better than regulators.”
At the same time, other lessons include the need for coordination and cooperation between different regulatory agencies. The CMA also stated that it now understands that it “should not give up any ideas until it has been properly evaluated”.
What do you think of the CMA’s “Regulatory Sandbox” report? You can share your thoughts in the comments section below.
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