Regulatory sandbox

A regulatory sandbox is a legal and administrative instrument, not a technology. The regulator defines a perimeter with a limited number of participants, a set timeframe and safeguards for customers and the market. Participants operate with specific exemptions but under supervision, and the regulator assesses the results at the end. It allows firms to test tokenized securities and blockchain infrastructure with legal cover before a full deployment.

In the EU several instruments coexist. The DLT Pilot Regime, Regulation (EU) 2022/858, is a sectoral sandbox for market infrastructures that trade and settle tokenized securities on DLT; it was adopted on 30 May 2022 and has been applicable since 23 March 2023, running for three years with an option to extend for another three. It covers three infrastructure types: DLT MTF (trading), DLT SS (settlement) and DLT TSS (combined trading and settlement). Separate from it is the European Blockchain Regulatory Sandbox, a European Commission initiative launched in 2023 for regulator-to-business dialogue on DLT use cases.

Regulatory sandboxes exist worldwide, from the UK Financial Conduct Authority model that popularized the concept in 2016 to Spain's financial sandbox created by Law 7/2020 of 13 November, supervised by the Bank of Spain, the CNMV and the DGSFP. Within the DLT Pilot Regime the CNMV is the competent Spanish authority, and ESMA published a June 2025 review report on how the regime is working, foreseen in its Art. 14. For an RWA project, a sandbox is the route to pilot tokenized securities with a regulatory fit.