Using Regulatory Sandboxes to Support Responsible Innovation in the Humanitarian Sector
| Date | 01 November 2019 |
| Author | Aaron Martin,Giulia Balestra |
| Published date | 01 November 2019 |
| DOI | http://doi.org/10.1111/1758-5899.12729 |
Using Regulatory Sandboxes to Support
Responsible Innovation in the Humanitarian
Sector
Aaron Martin
Tilburg Institute for Law, Technology, and Society, Tilburg University
Giulia Balestra
UN Refugee Agency
Abstract
The global regulatory community continues to explore new approaches to supervising innovation. Among these, so-called
‘regulatory sandboxes’are proving to be particularly appealing to the financial sector as it seeks to promote technological and
data-driven innovation. These ‘playgrounds’for innovation are also spreading to other regulated sectors such as telecommuni-
cations, data protection, energy, and environmental protection, allowing participants to test new business models and tech-
nologies under the supervision of regulators while the applicable rules are temporarily relaxed. Regulators can provide
targeted guidance to sandbox participants, including help with understanding how an innovation fits within the existing regu-
latory framework. As of July 2019, at least 50 sandboxes were either in operation or under consideration globally. Significantly,
many of these are based in countries that host large numbers of displaced persons. This commentary explores the potential
role for sandboxes in promoting responsible humanitarian innovation. Through a review of the literature, we discuss the sta-
ted benefits of the sandbox approach while also acknowledging notable risks and challenges to their sustained deployment.
We then reflect on how the humanitarian sector might engage regulators and other stakeholders through sandboxes to
develop and catalyze innovations that better serve those affected by humanitarian crises, including the displaced.
The global regulatory community continues to explore and
experiment with new approaches to supervising innovation.
Among these, so-called ‘regulatory sandboxes’are proving
to be particularly appealing to the financial sector as it seeks
to promote technological and data-driven innovation,
including the use of financial technology. These ‘play-
grounds’for innovation are also spreading to other regu-
lated sectors such as telecommunications,
1
data protection,
2
energy,
3
and environmental protection,
4
allowing partici-
pants to test new business models and technologies under
the supervision of regulators while the applicable rules are
temporarily relaxed. Regulators can provide targeted guid-
ance to sandbox participants, including help with under-
standing how an innovation fits within the existing
regulatory framework. As of July 2019, at least 50 regulatory
sandboxes were either in operation or under consideration
globally.
5
Significantly, many of these are based in countries
that host large numbers of displaced persons (e.g. asylum
seekers and refugees
6
), such as Jordan, Kenya, Malaysia,
Nigeria, Thailand, Uganda, and the United States of America.
This commentary explores the potential role for regulatory
sandboxes in promoting responsible humanitarian innova-
tion. Through a review of the literature, we discuss the sta-
ted benefits of the sandbox approach to governing
innovation while also acknowledging notable risks and chal-
lenges to their sustained deployment. We then reflect on
how the humanitarian sector might engage regulators and
other stakeholders through sandboxes to develop and cat-
alyze innovations that better serve those affected by
humanitarian crises, including the displaced.
Regulatory sandboxes are safe spaces in which organiza-
tions can test products or services with reduced risk of regu-
latory exposure. Regulators require sandbox applicants ‘to
incorporate appropriate safeguards to insulate the market
from risks of their innovative business’(Zetzsche et al., 2017,
p. 64). A sandbox may also be viewed as a ‘framework
within which innovators can test business ideas and prod-
ucts on a “live”market, under the relevant regulator’s super-
vision’(Agarwal, 2018). The United Kingdom’s Financial
Conduct Authority is credited with popularizing the concept
in 2015 to describe its program to encourage firms to test
innovation in a real market environment. It has since spread
fast, both internationally and increasingly across sectors.
Building on Zetzsche et al. (2017), we can delineate a num-
ber of common characteristics of regulatory sandboxes oper-
ating globally:
[Correction added on 20 September 2019, after first online
publication: The affiliation of Giulia Balestra has been
updated.]
Global Policy (2019) 10:4 doi: 10.1111/1758-5899.12729 ©2019 The Authors. Global Policy published by Durham University and John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use,
distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.
Global Policy Volume 10 . Issue 4 . November 2019 733
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