Regulatory Sandboxes

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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 with 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 a federal 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).

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

The interdepartmental consultation has now closed. Thank you to departments and agencies for their feedback and input.

A special thank you to those who joined our webinar on May 13th. Your engagement and insights were greatly appreciated.

Questions?

If you have any questions, please contact the CRI at: cri-cir@tbs-sct.gc.ca.