Spain already has its financial sandbox, after this Thursday, November 4, the Senate definitively approved the Law for the Digital Transformation of the Financial Sector, which will soon be published in the Official State Bulletin (BOE).
The regulatory sandbox is a long-awaited initiative by the fintech ecosystem. It is a controlled test bench to facilitate fintech and insurtech to develop their technological innovation projects, with a special supervision.
In this way, many projects that would not receive funding due to lack of legal security in a traditional environment, will obtain an authorization or license from the Spanish government.
So, fintech and insurtech companies now have a legal space to market their products, which will boost the attraction of investment for their development.
The Sandbox is, therefore, the guarantee of legal security for all those interested in the development of business models of fusion between the financial or insurance and the technological that did not exist until now.
Sandbox, attracting talent
Sandbox, attraction of With its implementation, which is expected immediately, possibly in early 2021, our country is placed on the European map asa reference in innovationas well as a magnet that will attract talent and innovation. If we take the British sandbox as a reference, it has authorized 170 projects in that country since its creation in 2016, 30% of which correspond to foreign firms. The Netherlands and Denmark also have one, while France has rejected it.
It is estimated that the Spanish sandbox will attract an investment of close to 1,000 million euros in the next two years, as well as the creation of more than 5,000 direct stable jobs. In short, we are talking about a great opportunity to to turn Madrid into a fintech capital, as promoted by MADFinTech through the Cibeles Manifesto.
Applications for the sandbox
once the law is passed, time will be given for the submission of applications. At the end of this period, the list of companies admitted by the Government will be published, which will also take some time to evaluate each of the proposals. Possibly, it is the Treasury to take care of this supervisory management.
Projects that aspire to enter this controlled testing space must be sufficiently advanced, so that it will not be possible to present a simple idea, and they will have to provide added value, facilitating regulatory compliance, improving quality, increasing user protection, contributing to greater market efficiency or providing mechanisms that improve regulation or supervision. MADFinTech has created a working group on project management to the Spanish sandbox.
That is, products and services that are already considered viable will be tested and considered for market launch. This is not because of the legal doubts that can be generated, but because of the lack of legal guarantees of the legal framework that many of these projects have.
Innovative entities or projects that are in a mature phase may undertake their activity under the exemption modality, in the case of activities that can be placed under the umbrella of the regulator with the current regulations, or under the non-subjection modality, for those activities not yet regulated due to their innovative nature.
In short, it places Spain as one of the countries of reference in the field of fintech regulation, encouraging the attraction and maintenance of national and international talent, facilitating investment in the sector and opening the door for financial and venture capital entities to invest in ‘startups’ and collaborate with them.