Sandboxing Is Best Way to Regulate Innovations, Says Chiloba

Adoption of alternative regulatory tools is the best way to oversight complexities arising from new and emerging innovations in Kenya.

Appearing before a special committee of the national assembly, the Communications Authority of Kenya (CA) Director General Mr Ezra Chiloba recommended the use of sandboxes to test market-ready solutions against existing regulations.

The parliamentary special committee was set up to inquire into the legal and regulatory compliance of Worldcoin and its subsidiary partners in Kenya and beyond.

The Worldcoin saga has highlighted several regulatory flaws, including the absence of a fully operationalized framework for digital currencies, the blurring of the lines between the responsibilities of various regulatory bodies as a result of ICT's facilitative role in many sectors, and the limitations of the current ICT consumer protection laws with regard to digital currency assets.

Chiloba noted that finding the right balance between regulation, facilitating innovations and creating an enabling environment was key in contributing towards the envisaged Digital Economy.

“There is need to develop an appropriate overarching legal framework for regulation on new and emerging technologies, including digital platforms, social-media and Over-the-Top services,” Chiloba said.

He added that the lack of a fully operationalized digital currency framework poses a risk of money laundering and consumer protection.

The Authority has put in place a regulatory Sandbox to nurture innovation as well as inform regulatory decisions and facilitate socio-economic development. Regulatory sandboxes are a substitute for traditional regulatory tools and provide access to live testing of current digital technology products and services thus offering pertinent data for comprehending new technologies.

Sandboxes also allow regulators to receive full information on innovations and new technologies. Plans are underway to implement this alternative regulatory tool in the ICT sector in Kenya. Public consultation on the framework for regulating sandboxes has been completed and the framework published.

The CA is awaiting legislative amendment to support the regulatory sandbox. Other countries that are developing a policy on sandbox as a regulatory tool include Rwanda, Singapore and Colombia.

A petition to the House to investigate the activities of Worldcoin triggered the ongoing inquiry on Worldcoin operations in the country.

Until its operations were stopped, Worldcoin was requiring users to provide iris scans to obtain a digital ID, also called World ID. The firm, which unveiled its activities on July 24, required users to have their irises scanned in exchange for cryptocurrency tokens valued at about Sh7,000 with about 350,000 people signing up.