FSC to Grant Exclusive Operation Rights Immediately Upon Fintech Sandbox Designation

Easing Financial Soundness Reviews
Preferential Licensing for Outstanding Businesses

Financial authorities are overhauling the financial regulatory sandbox system to support fintech startups. Moving forward, exclusive operation rights will be granted from the sandbox designation stage. In addition, the financial soundness review will be relaxed, and incentives will be provided for licensing reviews during the transition to the institutional financial sector.

According to the Financial Services Commission on June 21, Financial Services Commission Chairman Lee Eogwon held the "Fintech Beyond Regulation, Transformative Finance for a New Era" event on June 19 and announced "innovation-friendly improvement plans for the financial regulatory sandbox system" that include these measures.

To better support the early growth of promising fintech startups, authorities will move up the timing for granting exclusive operation rights from the post-sandbox, formal licensing stage to the sandbox designation stage. Small and innovative businesses that obtain exclusive operation rights will receive packaged support for commercialization costs, and the cap on support for testing costs will be raised from 120 million won to 200 million won. The support ratio for liability insurance premiums will also increase from 50% to 100%.

The entry barrier for startups into the sandbox will also be lowered. To ensure that a lack of financial soundness alone does not prevent innovative financial services from being launched, a new review system will evaluate growth potential and the possibility of addressing deficiencies together, and excessive additional requirements will be eased. Compliance training, in-person briefings, meet-up events, and networking programs will also be expanded.

The post-management system for supporting the transition from the sandbox to the institutional financial sector after the program ends will be strengthened. Authorities will conduct annual reviews of innovative financial service performance and quickly revise relevant regulations to facilitate the commercialization of outstanding services. They will also provide guidelines on the validity and duration of existing sandbox designations to reduce uncertainty for businesses.

Outstanding innovative businesses will be offered additional points in licensing reviews and access to a fast-track process. While minimizing service disruptions caused by regulatory tightening, monitoring systems for consumer protection and financial market stability will be further advanced.

The scope of the sandbox will be expanded to cover regulations related to internet-only banks, and review procedures for identical or similar services will be streamlined. Authorities will also activate planning-oriented sandboxes for inclusive and future finance, aiming to identify detailed tasks and recruit participating businesses in the second half of the year.

Chairman Lee emphasized, "The financial regulatory sandbox has played the role of a game changer, driving structural change in the financial industry, but it has also shown some limitations in ensuring the sustainable growth of innovative fintech companies and their stable transition into the institutional sector. We will expand opportunities for fintech companies to take on new challenges, further strengthen the protection of innovative ideas, and actively support a smooth landing in the institutional financial sector."

This content was produced with the assistance of AI translation services.