“Fintech sandboxes” are all the rage. The Consumer Financial Protection Bureau (CFPB) recently proposed a disclosure sandbox, the Arizona attorney general has adopted a fintech sandbox, and both legislators and regulators in Washington are discussing ways to use sandboxes to promote financial innovation.
A sandbox is a safe place to play, outside of the real world, and outside of real-world rules. Sandboxes are great for little children. But letting companies “play” in the real world, taking real money from real people and exposing consumers to real risks without following the rules, is not child’s play.