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Even if existing regulations are maintained, the “regulatory sandbox” system was introduced as a means of flexibly operating regulations on market entry and testing. Special Act on Promotion of ICT Convergence (hereinafter referred to as the “ICT Convergence Act”), which requires the introduction of the regulatory sandbox system, was enacted on September 20, 2018 and has been in effect since January 2019. Some say that regulatory sandboxes are the driving force for innovative growth while others criticize that the effects of regulatory reform do not satisfy the expectations or exceed the limits of the existing framework. This report analyzes the situation and legal issues of ICT regulatory sandbox operations, one year after the opening of the sandbox in South Korea.

Although the regulatory sandbox itself is not legally defined, it can be explained that it consists of regulatory exceptions, special regulations for testing, temporary permissions, and subsequent regulations. In particular, the ICT Convergence Act reflects regulatory uncertainty. However, individual ordinances such as ICT Convergence Act, Industrial Convergence Promotion Act, Financial Innovation Act, Regional Special Zone Act and Smart City Act need to be organized. For example, the Industrial Convergence Promotion Act and the Local Special Zones Act have provisions to consider extending the term of validity of the temporary permit if it has not been determined after the temporary permit, but the ICT Convergence Act does not provide for extending the term of validity thereby it is necessary to standardize such a guide.

To benefit from regulatory sandboxes, products and services must be innovative and new to create special and market values. This is called “innovation.” The ICT Convergence Act gives the administration a wide range of discretionary decisions on innovation that may be utilized as a means of avoiding or circumventing exiting regulations. Fundamental regulatory reform should be resolved through the enactment and revision of the current law. Regulatory sandboxes must first be used to test innovative business models that are difficult to effectively address with existing regulatory frameworks and serve as a forum for future regulatory improvements.