The Business Council of Australia ( BCA) welcomes the opportunity to provide a submission to Treasury’s consultation on the Review of the Enhanced Regulatory Sandbox (ERS).
The BCA supports regulatory frameworks that enable innovation while maintaining appropriate consumer protections and views the ERS as an important tool within Australia’s broader innovation ecosystem. While Australia has a strong and growing fintech and digital asset sector, regulatory complexity, fragmentation and uncertainty continue to constrain innovation, investment and scale relative to peer jurisdictions. To remain competitive, Australia must maintain an open and adaptive regulatory mindset, ensuring that insights from sandbox participation inform timely regulatory refinement where barriers or unintended constraints are identified. In this context, the ERS plays a valuable role by allowing firms to test innovative products and services in a controlled environment, but it has not yet realised its full potential, particularly in supporting scale-up, attracting global capital and enabling cross-border innovation.
The low utilisation of the ERS, as outlined in the consultation paper, warrants careful consideration of the scheme’s design and settings. International experience indicates that modest utilisation of regulatory sandboxes is not unique to Australia. In many jurisdictions, participation has remained limited, reflecting similar challenges around scale, commercial viability and uncertainty regarding regulatory outcomes following sandbox testing. For example, the Australia scheme has received 103 applications since 2020, while the UK scheme has received 630 applications since 2016. Like its UK counterpart, the Australian scheme has a low application-to-acceptance ratio.
While the ERS is still relevant, the rapid pace of financial innovation in the last few years, particularly in areas such as tokenised asset markets, suggests that different frameworks can complement the ERS to achieve similar objectives. We point to Project Acacia, a joint initiative between the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre, as one such example. This initiative, supported by ASIC and APRA, acknowledges that a sector-wide bespoke approach is more appropriate for testing and assessing risks and opportunities, rather than utilising the ERS given the scale and potential impact on the domestic and global financial market and underlying infrastructure.