Australia's corporate regulator plans to let finance technology start-ups test their ideas with customers for six months without the need for a financial services licence.
ASIC today released a consultation paper outlining its plan for a "regulatory sandbox", intended to allow for "limited testing and concept validation to occur without businesses needing to comply with all the usual regulatory obligations".
This sandbox will allow fintech start-ups to get to market more quickly and provide them a greater opportunity to attract investment, ASIC said.
The approach had been proposed as part of the federal government's May budget.
ASIC today said the concept was borne from the difficulty fintech start-ups were experiencing bringing new ideas to market at speed and therefore accessing capital.
At the moment a new fintech business would need to obtain an Australian financial services (AFS) licence from ASIC, or be backed by another licensee, to publicly test its products or services.
Stone & Chalk CEO Alex Scandurra said going through the licensing process was time consuming and expensive for start-ups.
He called the sandbox approach a "potential game changer".
"A sandbox will allow for greater user testing and validation prior to starting the licensing process - something which will help reduce the time and costs needed to commercially launch a fintech product or service," he said in a statement.
"If implemented not only would [the sandbox] lead the world and leapfrog what the UK is contemplating, it would provide a strong proof point towards the successful collaboration between leaders in the fintech community, ASIC and federal Treasury that started late last year."
ASIC said that while the current regulatory framework offered "significant flexibility", it recognised that innovative start-ups might need extra help.
The new six-month licensing exemption would remove barriers to entry and therefore increase competition for the ultimate benefit of financial services customers, ASIC said.
Sandbox start-ups will need to offer consumer protections like dispute resolution and compensation, and will also need sponsorship from an ASIC-approved organisation for the testing.
Additionally, the exemption is only open for liquid products like shares and deposits, and cannot be used for things like derivatives, life insurance or superannuation.
It is only available to financial technology start-ups.
ASIC is seeking feedback on its proposal until July 22. It plans to cement the exemption by December.