The Alberta government is proposing a regulatory sandbox for financial services and FinTech companies. Bill 13, the Financial Innovation Act, signals that Alberta is willing to work with innovators and businesses that are developing cutting-edge products and technologies, the province said.
The sandbox would be the first of its kind in Canada, and would provide financial services and FinTechs a strong incentive to move to Alberta, claims the provincial government.
In its Capital Markets Modernization Taskforce: Consultation Report in 2020, the Ontario government proposed establishing a regulatory sandbox, but has yet to act on that recommendation. For its part, the Ontario Securities Commission put a regulatory sandbox for FinTechs in place in 2021.
The government noted that regulatory sandboxes offer businesses temporary relief from certain legislative and regulatory requirements, making it simple for them to test new products and expand their offerings to consumers.
If passed, the Financial Innovation Act would begin upon receiving royal assent. The province anticipates it would start accepting sandbox applications by July 1.
The province said the sandbox would signal that Alberta is willing to work with and support innovators with products like blockchain technologies and cryptocurrencies.
Examples of technologies that might be tested in the sandbox include soft tokens, biometric authentication, application programming interface services, distributed ledger technologies, and mobile app enhancements. A soft token is a security resource often used for authentication. A common soft token is a personal identification number.
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If the Financial Innovation Act passes, companies participating in the sandbox would have to maintain a physical presence in Alberta, be a financial services firm or FinTech, show proof of a product’s innovation, and have a sound and viable business plan.
Participants would have up to two years to test their product with the possibility of a one-year extension.
Not surprisingly, FinTechs and crypto companies are endorsing the proposed act.
“This legislation is a game-changer for our industry,” declared Koleya Karringten, the executive director of the Canadian Blockchain Consortium. “It shows Alberta is leading the way as a destination for blockchain technology and innovation. Bill 13 will streamline the legislative and regulatory process, making it more viable for companies to bring their ideas and businesses to life.”
Andrew Chau, the co-founder and CEO of Neo Financial, said: “It’s initiatives like the regulatory sandbox that helps attract companies and talent to Alberta, and allows us to continue to build upon and pave the way for new fintech innovation.”