A slew of fintechs is taking advantage of special rules that allow them to build their enterprises and test their technology, without worrying they are inadvertently falling foul of financial markets’ regulations.
Thanks to these concessions, known as regulatory sandboxes, emerging firms are solving problems like complex payment rails, even giving our star athletes control over their data so they can monetise it.
One fintech using these rules is a blockchain-based platform that is reshaping sports data, EQUIL Labs. The software firm was founded by Australian Olympic heptathlete Tori West, who is currently training Europe. The Australian Securities and Investments Commission’s (ASIC) regulatory sandbox, more formally known as an Enhanced Regulatory Sandbox (ERS), has provided a framework for West to develop her tech.
Founded in 2022, EQUIL Labs emerged from West’s vision to give athletes the ability to own and monetise their performance information. Her platform consolidates disparate data sources such as fitness trackers and health applications into a single, secure blockchain-based ecosystem.
“I want to unlock the latent value of athletes’ data and provide them with a means to benefit financially from their performance metrics,” says West.
The ASIC regulatory sandbox has been instrumental in Tori’s journey, allowing her to implement wallet technology for athletes and facilitate the secure storage and management of digital assets. Through a token-based system, athletes can monetise their data while retaining control over who accesses it, turning their performance metrics into valuable digital assets.
EQUIL Labs has more than 1,400 athletes actively testing the platform. An additional 5,000 athletes are poised to join.
West is prepping the business to move into overseas markets, including an upcoming venture in India. Looking ahead, her approach has the potential to transform the sports industry and other sectors seeking to understand the implications of blockchain technology in data ownership and monetisation.
Kuber Financial founder and CEO, Vihan Bawa, has also taken advantage of ASIC’s sandbox to develop his fintech. Bawa moved to Australia from India in 2018 as a master’s student. He was surprised Australia’s payments system was so clunky.
“Like many others, I paid bills with a card, sent money home and kept wondering why getting paid is still so expensive and complicated. Coming from India, where payments have evolved rapidly with real-time transfers and zero fees, it made me question why businesses and everyday Australians were still burdened by outdated systems and surcharges,” he says.
In contrast, Kuber’s platform allows businesses to accept payments in minutes.
“We support Australian businesses from local retailers and barbers to event organisers and e-commerce stores with a platform that removes complexity, lock-in contracts and costly infrastructure,” Bawa says.
ASIC’s sandbox gave Bawa the space to understand the behaviour of people who use his platform, test pricing and design and become comfortable with meeting compliance obligations.
“It’s allowed us to build infrastructure that’s ready to scale and create a solution based on facts, not assumptions,” he says.
Bawa’s advice to other businesses to make the most of the sandbox is to treat it as a learning environment, rather than a shortcut.
“Use the sandbox to learn how to build something that’s compliant and sustainable. It’s a great way to understand what matters to users, regulators and partners before you go all in.”
An ASIC spokesperson confirms many different businesses can participate in the Enhanced Regulatory Sandbox (ERS).
“Eligibility extends to entities that do not currently hold an Australian Financial Services or credit licence or corporate authorisation, as well as those who do but seek to test services within the ERS distinct from their existing authorisations. Overseas entities may also apply, provided they are registered in Australia with an Australian Registered Body Number (ARBN),” said the spokesperson.
“Australian citizens or permanent residents may participate if they are unlicensed or wish to test services other than those for which they are currently authorised. All applicants must ensure that the financial services, products, or credit activities they intend to test fall within the permitted scope of the ERS.”
Applicants must not have previously used the ERS to test the same financial service, product or credit activity. Entities intending to operate a financial market or a clearing and settlement facility are not eligible for participation in the ERS.
Businesses thinking about applying for the ERS should go to ASIC’s guidance information Sheet INFO 248 Enhanced regulatory sandbox | ASIC for more info. ASIC can help you understand if you’re eligible for the ERS and give you tips on completing the application form with. Contact ASIC at innovationhub@asic.gov.auto find out more.
Across the ditch, New Zealand’s Financial Markets Authority (FMA) has recently embarked on its first regulatory sandbox pilot with six firms.
“We are currently working with the firms creating appropriate regulatory pathways that will allow them to launch and test their financial products with customers in New Zealand,” says FMA technical specialist, fintech and innovation Alan Crofts.
The FMA expects the fintechs that have been a part of the pilot to start operating commercially in the sandbox later this year.
For more go to … https://finsia.com/news-and-resources/sandboxes-help-aussie-and-kiwi-start-ups-transform-our-financial-services