16 July 2019
Barbados a regulatory sandbox framework in October 2018 as a joint initiative between the Central Bank of Barbados and the Barbados Financial Services Commission (the “Barbados Regulatory Sandbox”), which is designed to attend to the needs of innovators - particularly those in the FinTech space.
On 5 July 2019, Bitt, a Barbadian FinTech company offering payment solutions powered by blockchain technology to central banks, financial institutions and consumers was the first company to successfully participate in and exit the Barbados Regulatory Sandbox. Over a period lasting several months, the Central Bank of Barbados and the Barbados Financial Services Commission worked with Bitt to critically assess its blockchain based payment solutions in controlled context. The Barbados regulators have confirmed the completion of testing and concluded that the trial business activity to be appropriate for regulation under legislation that is proposed to be drafted.
The term “FinTech” refers to the intersection between financial services and technology and the providers of solutions in this space are, by definition, disruptors of existing paradigms. This disruption is invariably attended by a degree of uncertainty as to the implications of such solutions and the application of existing regulatory frameworks.
It is against this backdrop that regulatory sandboxes offer a viable solution for balancing challenge and opportunity. A sandbox, in its ordinary meaning, refers to a safe place for children to play, and functions in precisely the same manner for purveyors of innovation. As jurisdictions around the globe vie for the opportunity to incubate innovation, regulatory sandboxes represent a critical plank in that value proposition and are key to attracting companies in that context.
The Barbados Regulatory Sandbox offers a space for the live testing of innovative financial products, services, and delivery mechanisms, where the risks to ordinary financial consumers and the financial system can be strictly contained. The eligibility criteria for applicants are as follows:
The Barbados Regulatory Sandbox is crafted to be a temporary testing transition phase, and not a permanent or space which a company occupies for a protracted period during which regulatory frameworks are suspended.
The framework provides for governance by a regulatory review panel comprised of representatives from the Central Bank of Barbados and the Barbados Financial Services Commission, the Director of Finance and Economic Affairs, as well as subject matter experts on invitation. There are specified time frames for the production of a draft assessment report by the regulatory review panel on completion of the testing period, the provision of a response by the applicant and for the publication of a final report by that panel.
The Barbados Regulatory Sandbox framework offers a regime for stress testing in an environment proactively designed to support and enable innovation, but with appropriate safeguards and the ultimate end in mind of production of best in class products and services.
For further information on Barbados’ economic substance regime, please contact Tara Frater(email@example.com) or firstname.lastname@example.org
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