By Fernanda Marques
Recently, the Central Bank of Brazil (BCB) and the National Monetary Council (CMN), have approved new rules in the implementation of a regulatory sandbox, and initiative which will permit entities to test innovative projects in the areas of finance and payments.
The objective of the program is to allow for the development of innovative business models that will efficiently generate profits, obtaining exposure to a large public and real clientele, in a way that will bring more competitiveness to the country’s financial system.
The sandbox is regulated through resolutions CMN nº 4.865 e BCB nº 29, which came into force on the 1st of December 2020. As a result, participating companies must comply with specific requirements, with controlled and limited performance of their activities. The BCB will have access to the results obtained and will evaluate the operation and credit risks associated with the products.
During the project, in cases of product failure or error, it can be adjusted, limited or prohibited by the regulating entity. However, in the case of a successful experience, the BCB may grant a definite authorization, enabling the commercialization of the innovation on a large scale.
In addition, the program is looking to benefit small companies and embryonic businesses. As a result, both regulated and non-regulated institutions will be able to take part in the sandbox, without needing, with no formal minimum capital requirement for the registered company.
In the testing phase, which is scheduled for the first semester of 2021, the participants will already be able to charge for their products, as long as the prices are announced in a transparent manner, ensuring the verification of users’ identity, the privacy of their data and transaction security.
The customer should know that the company is in a testing period and how long it will last, and should be informed if there is any change in the operation or if the project comes to an end.
The initiative is part of the BCB’s efforts to modernize the Brazilian financial system, together with their last actions which involved PIX and Open Banking. For Brazilian fintechs, the sandbox represents an advancement and encouragement in the country’s technological development of investment and payment services.