The Capital Markets Authority (CMA) is in the process of establishing a regulatory sandbox platform which will regulate fintechs including cryptocurrency start-ups. This is according to its current research paper on the low intake of capital market products.
To achieve this goal, the CMA is engaging with the following institutions: Nailab, MyCenti, Point50 Capital, Partnership for Urban Innovation, Cambridge Center of Alternative Finance, Bitpesa, FMO (Netherlands Development Finance Company), Lendahand, Renovation Capital, CENFRI (Center for Financial Regulation and Inclusion).
CMA chief executive Paul Muthaura recently said:
“We intend to use the Fintech Sandbox Framework to create a [facilitation] environment for unrestricted (public/retail) issuance to occur with an appropriate level of oversight.”
The Regulatory Sandbox
According to the World Bank, a regulatory sandbox is a “set of rules that allows innovators to test their products/business models in a live environment without following some or all legal requirements, subject to predefined restrictions.”
Mauritius, which was ranked the second most innovative country in Sub-Saharan Africa, already has a regulatory sandbox which has played a huge role in attracting investors in the fintech and emerging technologies sectors.
The research paper states: “The regulatory sandbox remains a distinct concept that has attracted considerable interest from fintech companies, both local and international. As a concept still under development, the Authority has an opportunity to use the regulatory sandbox as a platform to fix the gaps that have been missing in the implementation of new Capital Markets products as identified in the next chapters of the concept paper.”
Kenya, also known as the world’s Silicon Savannah in the tech world, could benefit greatly from a regulatory sandbox especially now that the government is pro blockchain technology and other emerging technologies.
Recently, Kenya’s blockchain and AI taskforce recommended the creation of local cryptocurrency and a digital asset registry.