Regulatory sandboxes for Islamic fintech: A maqasid-basedcomparison of Indonesia, Malaysia, and the United Kingdom
Keywords:
regulatory sandbox, islamic fintech, shariah governance, maqosid al-shariah, artificial intelligence, comparative lawAbstract
Regulatory sandboxes have become an important mechanism for facilitating financial
technology innovation while maintaining regulatory oversight, risk management, and
consumer protection. Islamic fintech introduces an additional regulatory challenge
because innovative products must comply not only with financial and technological
requirements but also with substantive Shariah principles. This study examines how
Shariah compliance can be integrated into regulatory sandbox frameworks in Indonesia,
Malaysia, and the United Kingdom and identifies institutional lessons for strengthening
the Indonesian framework. This study employs normative legal research using statutory,
comparative, and conceptual approaches. The comparison focuses on the legal basis of
sandboxing, competent regulatory authority, testing mechanisms, consumer safeguards,
Shariah governance arrangements, the stage at which Shariah considerations may enter
the sandbox process, and post-testing implications. These dimensions are evaluated
through the maqasid al-shariah framework, particularly hifz al-din, hifz al-mal, and hifz
al-'aql. The findings demonstrate that the decisive regulatory issue is not merely whether
a jurisdiction possesses both a regulatory sandbox and a Shariah authority, but whether
Shariah assessment is procedurally connected to the admission, testing, monitoring,
modification, and exit stages of sandbox experimentation. Malaysia provides the
strongest surrounding institutional architecture for Shariah governance, while the United
Kingdom offers an influential model of structured experimentation and regulatory
learning. Indonesia possesses both an increasingly structured sandbox framework and
an established Shariah governance ecosystem, but the procedural interface between these
systems remains insufficiently formalised. This study therefore proposes a Joint Fintech
Shariah Desk coordinated between OJK and DSN-MUI and the development of Shariah
Sandbox Guidelines to facilitate preventive Shariah assessment concerning contractual
structures, pricing mechanisms, risk allocation, algorithmic decision-making, consumer
disclosure, and data governance
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