Reviewed by Feb 19, 2021| Updated on
A crypto regulatory sandbox is a testing live-like environment used to ensure regulatory compliance and security checks for financial operations. These operations include cryptocurrencies and blockchain-based system.
Sandbox is commonly used in the world of software development. It is an isolated but fully functional testing environment where software or apps could be tested. If a new piece of code is written, they may use a sandbox to test it.
The concept of a regulatory sandbox is now being extended to the world of cryptocurrencies, where financial regulators are offering authorised businesses the possibility of testing blockchain products.
Use of a regulatory sandbox allows authorised businesses to test their products, services, business models and delivery mechanisms real-time on a trial basis.
It helps cost reduction, improves access to capital, and ensures adherence to compliance requirements.
Such regulatory sandboxes allow direct communication between fintech developers and businesses and regulatory officials while mitigating the risks such as security flaws.