The Isle of Man really isn’t a place that you tend to associate with modernity.
Known for its rugged, mountainous landscape and unique medieval castles, this little “self-governing British Crown dependency” has a population of under 100,000, and an area of less than 600 km².
However, the Isle of Man has been making great strides and blazing a trail for cryptocurrency systems around the world.
Now, today, Cointelegraph and other venues are announcing that the island government has agreed to launch a “hub” for blockchain promotion and regulatory projects.
The resulting Blockchain Office, reporters say, is intended to provide a good foundation for blockchain projects to thrive on the island. But this is just one of two brand-new initiatives on the Isle of Man – the other one is an “Isle of Man sandbox” that will tie together regulatory and legislative oversight for these enterprise projects.
Let’s break that down a little bit.
A “sandbox” in regulatory parlance is defined as an environment that allows for testing in terms of regulatory compliance and related security issues and more.
“’Sandbox’ is a commonly used term in the area of software development, which refers to an isolated but fully functional testing environment where software, apps or programs can be tested. If a programmer writes a new piece of code, they may use a sandbox to test it,” wrote Jake Frankenfield in Investopedia in June of last year, describing how a conventional sandbox works. “For instance, say a programmer working on updating the Uber app adds a new feature to more accurately locate the passenger using GPS, or a team of developers at Facebook enhances the site’s functionality to restrict users from sharing posts that may have been flagged as fake news. Before such updates and features are launched, they may be tested in an isolated and controlled environment, the sandbox. Beyond testing features and functionality, a sandbox also allows security aspects to be verified.”
Frnakenfield points out that since the fintech industry is exploding, and so many new projects are coming online, having a sandbox approach makes sense.
“Nurturing innovations without the overheads of over-regulation and protection of consumer interests needs a balanced approach, for which regulators of many nations have adopted a ‘regulatory sandbox-‘ based approach,” he writes. “Use of a regulatory sandbox allows authorized businesses to test their innovative products, services, business models and delivery mechanisms in the real market, with real consumers, on a trial basis. It helps reduce the time to market at low cost, improves access to capital, and ensures adherence to compliance requirements. Such regulatory sandboxes allow room for direct communication between fintech developers and businesses and regulatory officials while mitigating thes risks of unintended negative consequences such as security flaws.”
For example, Isle of Man cryptocurrency enterprises will have to comply with anti-money laundering rules designed by the local government there.
If you’re a crypto trader who likes flag theory, it would make sense to keep an eye on this little island to see if its innovations play into market moves.