The Australian Government is reviewing the enhanced regulatory sandbox (ERS) to assess its effectiveness and how it could better support innovation. Only 19 entities have been accepted since its inception in 2020.
Where things stand
On 1 September 2020, the government introduced the ERS to allow testing of certain innovative financial services or credit activities for a period of 24 months without first obtaining an Australian financial services licence (AFSL) or Australian credit licence. Relevant financial services and credit activities include life insurance, superannuation products, crowd-sourced equities and the issuance of payment facilities. Applicants must also limit individual retail client exposure to $10,000 for certain products and total customer exposure must not exceed $5 million.
Uptake of the regime has been limited. As of December 2025, only 19 entities have participated in the regime with three entities becoming authorised representatives (now ceased) and one obtaining an AFSL. There are currently four entities participating in the sandbox.
Review of the enhanced regulatory sandbox
In line with legislative requirements, the government has initiated an independent review of the ERS. Terms of reference were released on 31 October 2025 and the review will assess the effectiveness of the ERS, consult stakeholders, develop recommendations to enhance Australia’s financial innovation settings and provide a final report. The ERS and its review form part of the government’s digital asset roadmap.
Treasury opened consultation on 17 December 2025, seeking views on:
The enablers and barriers to financial innovation in Australia (for example, regulatory and policy settings, funding and access to capital, ecosystem and institutional factors, market dynamics).
The effectiveness of the ERS including comparison with overseas sandbox models.
How the ERS could better support financial innovation in the context of significant proposed reform to payments licensing and digital assets.
Current proposals
While the review is still in its early stages, current proposed amendments to the ERS include:
Creating a structured off-ramp from the sandbox to a full AFSL.
Broadening the ERS to accommodate a range of innovative firms and a more diverse range of products and services.
What’s next
Consultation closes 6 February 2026. A final report is expected to be delivered to the Australian Government by mid-May 2026.