A study of the regulations and legal framework governing the fintech sector in the United Kingdom and in the United States and lessons from both frameworks to emerging markets concerning their fintech legal systems and the adoption of sandbox in Saudi Arabia.

Abstract

As fintech firms are continuously innovative, and as they struggle to find out how standing regulations are applicable to them. Some regulators recognised the need for a unique framework to deal with such sector and that is to give an experimental space for Fintech firms where they can obtain waivers and exemptions from certain legal requirements that traditional financial institutions would normally adhere to. This is called a regulatory Sandbox. Other regulators cited fears of consumer protection risks as well as fears of excessive state intervention and have therefore refrained from adopting a sandbox. I argue that the risks imposed by having a sandbox could be theoretically mitigated to a reasonable minimum and can be outweighed by benefits to the sector as non-compliance costs could be avoided to an extent by having the regulator assistance in setting a tailored and clear path for the firm.