Ex Ante “Regulation”? The Legal Nature of the Regulatory Sandboxes or How to “Regulate” Before Regulation Even Exists

Abstract

Prior to the Global Financial Crisis, financial innovation was driven by so many factors, but the Global Financial Crisis changed the regulatory pendulum, which has swung to deeper regulation and also changed the way we think about financial innovation. The financial innovation – with its bright and destructive outcomes – is an integral part of the competition in the financial market. But the race is such that the regulatory authorities are in a rather disadvantaged position if we just think of the old fashioned regulatory paradigm. In this context, the question is what – new – legal institutions – such as the regulatory sandbox – could provide financial stability and a proper legal regulation to unregulated financial products and services.