Regulatory Sandboxes

What are Regulatory Sandboxes?

Regulatory sandboxes can help regulators keep pace with the speed of innovation by learning the real-life impacts of new products or services before their full entry into the marketplace.

Regulators may be unsure about how to regulate a new product or service. They may also lack the data needed to understand how a new regulatory approach would work, or how to effectively resolve a regulatory barrier that is stopping an innovation from getting to the market. In these cases, regulators could use regulatory sandboxes to help understand how the innovation works in practice and then use that evidence to make any permanent regulatory changes or decisions – all while continuing to uphold protections for health, safety, and the environment.

For example, regulators may want to understand how a regulatory approach would work for a new technology that is not allowed by the regulations. In these cases, regulators could enable regulatory sandboxes by issuing temporary limited exemptions from a specific legislative or regulatory requirement that would allow them to evaluate how the new technology could be regulated in practice. Within a controlled environment, regulators can actively monitor the approach and put in place conditions to make sure that consumer protections are upheld throughout. If any unexpected risks come up or the situation changes, regulators can change the conditions or end the regulatory sandbox as needed. The evidence gathered could help regulators to make regulatory change that would permanently allow the new technology.

By learning from these regulatory sandboxes, regulators can determine how they should design and manage regulations and create modernized frameworks that are more effective and well-suited to innovation.

Regulatory Sandboxes in the Federal Government

In Budget 2024, the Government committed to enable broader use of regulatory sandboxes across government, including announcing its intent to introduce amendments to the Red Tape Reduction Act to provide all Ministers will the authority to issue exemptions for the purpose of enabling regulatory sandboxes.

To support the Government’s commitment in Budget 2024, the Treasury Board of Canada Secretariat (TBS) has developed an enterprise-wide framework for regulatory sandboxes, informed by discussions with federal regulators as well as a public consultation on the Let’s Talk Federal Regulations platform (What We Heard Report).

NEW - Consultation: Policy on Regulatory Sandboxes (May 6, 2024, to May 24, 2024)

TBS is seeking feedback from federal regulators on a draft Policy on Regulatory Sandboxes under the Cabinet Directive on Regulation that would support the implementation of the enterprise-wide framework and will establish direction for federal regulators to ensure common safeguards and prescribed best practices for conducting regulatory sandboxes across the government.

·        WEBINAR: Please join TBS’s Centre for Regulatory Innovation for a webinar on May 13,2024 from 10:00 to 11:00 EST to learn more about the consultation and ask questions before providing departmental feedback! To register for the webinar, please fill out this online form: [LINK]

Questions?

If you have any questions, please contact the CRI at: [[1]].