Exploring the Blockchain "Regulatory Sandbox": From Innovation in the UK to Practice in China

Recently, the Hong Kong Securities and Futures Commission announced that cryptocurrency exchanges would be included in the "Regulatory Sandbox", a move that has once again sparked public interest in the concept of "Regulatory Sandbox". The "Regulatory Sandbox" was originally proposed by the UK government in March 2015, aimed at providing a relatively relaxed regulatory environment for fintech companies to test innovative financial products, services, and business models. At the same time, regulators can also explore suitable regulatory approaches for financial innovation in this environment, achieving a win-win situation for both parties.

This innovative concept has quickly gained widespread recognition and adoption in the international community. Several countries have successively established regulatory sandboxes for cryptocurrencies and virtual finance. In China, apart from Hong Kong, places such as Ganzhou in Jiangxi, Taizhou in Shandong, Hangzhou in Zhejiang, and Shenzhen in Guangdong have also begun exploring and practicing the "Regulatory Sandbox."

In the country, the Ganzhou Blockchain Financial Industry Sandbox in Jiangxi Province is the first "Regulatory Sandbox" led by government departments. The park encourages the settlement of enterprises engaged in blockchain technology innovation and financial application innovation, and provides policy support. Currently, the park has built an industrial park with a total area of 25,000 square meters and has introduced a series of relevant policies, including the issuance of compliance chain standards and advocacy for blockchain record filing. Although the park has been in operation for more than a year, its actual effectiveness in promoting blockchain industry innovation and regulatory innovation still needs further observation.

Hong Kong's "Regulatory Sandbox" is closer to international standards. The Hong Kong Securities and Futures Commission plans to explore the operation of cryptocurrency exchanges under the regulatory sandbox in two phases to determine whether they should be regulated. During the sandbox period, crypto exchanges that intend to accept regulation will receive special regulatory exemptions to conduct exploratory operations.

However, some cities in China, under the banner of "Regulatory Sandbox", are actually more like operating industrial parks. For example, the "Regulatory Sandbox" practices in Shenzhen and Taishan are essentially led by non-profit organizations, lacking direct participation from the government or regulatory agencies. These projects are closer to the traditional industrial park model, primarily gathering Blockchain companies, rather than being a true regulatory innovation platform.

The real "Regulatory Sandbox" should connect fintech innovation companies and government regulatory departments at both ends, jointly exploring new policies suitable for fintech innovation within a specific scope. "Regulation" is the core essence, not merely providing physical space or lenient policies.

Currently, the practice of "Regulatory Sandbox" in most cities in China is still at the level of industrial support, with limited substantive significance for promoting the coordinated development of regulatory mechanisms and financial technology innovation. Although it cannot be ruled out that the industry clusters led by these autonomous industry organizations may produce effective self-regulatory norms and subsequently influence regulatory policies, the realization of this goal still faces many challenges based on the current operational situation of blockchain industrial parks.

With the rapid development of Blockchain technology, the "Regulatory Sandbox", as a representative of regulatory technology under financial technology innovation, still has certain gaps between its practice in China and international standards. In the future, how to truly achieve regulatory innovation and promote the coordinated development of regulatory mechanisms and financial technology innovation will still require joint efforts and exploration from the government, enterprises, and industry organizations.