The Capital Markets Authority Markets Authority (CMA Kenya) Board has approved guidelines for setting up a regulatory sandbox for the fintech startups in Kenya. This hub will help the companies build innovative products at a lower cost.
“We welcome fintech firms and innovators to apply for admission to the Regulatory Sandbox. Where they are successful, they will have a 12-month period to deploy and conduct live-tests of their innovative products, solutions and services”, CMA Chief Executive Mr. Paul Muthaura said. The Sandbox is expected to also accelerate CMA’s understanding of emerging technologies, support adoption of an evidence-based approach to regulation and facilitate deepening and broadening of Kenya’s capital markets.
CMA will, however, assess regulatory requirements to be temporarily modified during a Regulatory Sandbox test on a case-by-case basis. In this context, the Authority will provide guidance where it considers that a proposed innovation is already clearly addressed under existing laws and regulations and therefore not fit for inclusion in the sandbox to avoid the creation of regulatory arbitrage between players rendering equivalent products or services.
Foreign applicants will be required to have a license by an equivalent capital markets regulator. Fintech firms will be considered for admission based on their documented plans to offer innovative products, solutions or services with the potential to deepen Kenya’s capital markets following successful exit from the Sandbox.
“The Sandbox is, however, not an incubation center and will not be able to receive applications based on ideas that have not been developed to the level of operational testing. The Sandbox will therefore not be considered for admission of purely conceptual proposed products, services or business models” Mr. Muthaura explained.