Regulatory Sandbox
Canadian businesses can face regulatory barriers to bringing new products or services to market efficiently when the rules are outdated or do not account for innovation.
A regulatory sandbox is a tool that can help federal regulators keep pace with changing technologies and reflect current business realities, challenges, and opportunities.
Regulatory sandboxes can allow industry to demonstrate the real-life impacts of a new product or service in the marketplace under a temporary set of rules and controlled by regulatory supervision. This can help a regulator safely decide whether to make any permanent changes to how that product or service should be regulated.
Let’s use light sport aircraft as an example
Transport Canada worked with a number of flight schools to examine whether light sport aircraft could be safely used for pilot training. Evidence gathered from the regulatory sandbox was used by Transport Canada to inform updates to the Personnel Licensing and Training Standards Respecting Flight Training to allow the use of light support aircraft for pilot training.
In Budget 2025, the government amended the Red Tape Reduction Act to allow temporary limited exemptions to existing legislation and regulations in order to run a regulatory sandbox in the clean technologies and financial technologies sectors. The Policy on Regulatory Sandboxes provides additional direction to departments on their use.
Regulatory sandboxes must protect the health, safety, security, and well-being of Canadians and of the environment. A regulatory sandbox may not be appropriate or possible in all circumstances and regulators should factor this into their decision before running a regulatory sandbox.