The Canadian Securities Administrators (CSA) last week announced the launch of a regulatory sandbox, an initiative that supports businesses seeking to offer innovative products, services and applications.

“The objective of this initiative is to facilitate the ability of those businesses to use innovative products, services and applications all across Canada, while ensuring appropriate investor protection,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We will consider applications, including for time-limited registrations, on a coordinated and flexible basis to provide a harmonized approach throughout Canada for business models, whether they are start-ups or incumbents”.

The CSA regulatory sandbox is open to business models that are truly innovative from a Canadian market perspective. This includes cryptocurrency or distributed ledger technology based ventures, business models using artificial intelligence for trades or recommendations, regtech-based ventures, and online platforms, including crowdfunding portals, online lenders, angel investor networks or other technological innovations for securities trading and advising.

The CSA said that interested businesses should first contact their local securities regulator, which will consider its eligibility and refer it to the CSA regulatory sandbox. Local securities regulators can also provide early stage guidance on the application of current securities regulatory obligations, as well as information and support.

As part of the application process, CSA Staff may request live environment testing, a business plan and demonstration of potential investor benefits. The CSA will assess the merits of each business model, on a case-by-case basis, and businesses that register or receive relief could be permitted to test their products and services throughout the Canadian market.