What is a regulatory sandbox?

Regulatory sandboxes provide the opportunity to explore innovative products, technologies, and services. They help demonstrate how an innovation could interact with and impact people, existing markets and regulation in the real world.

A regulatory sandbox is a space, crafted and controlled by a regulator, designed to allow the testing of novel products or processes to be conducted under supervision prior to their full entry into the marketplace.

Regulators can benefit from regulatory sandboxes to create an environment in which an experiment can safely take place. When designing a sandbox, regulators consider the protection of consumers, the public and the environment as well as the demands and needs of industry. The centre encourages federal regulators to run sandboxes in conjunction with interested innovators and stakeholders.

• Remotely Piloted Aircraft Systems regulatory sandbox

  One example of a sandbox run by a federal regulator is related to drone or Remotely Piloted Aircraft Systems (RPAS) technology. Transport Canada created a regulatory sandbox for the testing of new drone applications. Special licenses were provided to industry participants, giving them the opportunity to conduct tests on currently prohibited or unregulated drone activities with government oversight, in a safe and innovative way. The evidence gathered from this sandbox has allowed Transport Canada to make informed amendments to the Canadian Aviation Regulations regarding drone use in Canada.