The Treasury will shortly be presenting the Arrangements Law to the cabinet, and this law includes provisions for a fintech regulatory sandbox. The sandbox is officially referred to as an Experimentation Environment.
Fintech regulatory sandboxes enable startups and established firms (depending on the rules of the sandbox) to test their innovations without the impediment of needing the full regulatory license that they would otherwise require. Getting a full license can forestall innovations, as the firm or product might not meet the criteria required for the license – or the cost and time to get the license might be too high.
Israel’s fintech sector has grown strongly recently, with equity investment doubling last year. It is hoped that the sandbox will further support growth in the sector.
Israel’s fintech sandbox has been in the works for over two years, but has faced a number of delays. The hope is that the sandbox is now reaching its final steps before initiation.
The fintech sandbox is expected to be overseen by a committee comprised of representatives from the Bank of Israel, the Israel Securities Authority, the Capital Markets, Savings and Insurance Authority and the Anti-Money-Laundering Authority.