Experts urged top financial regulators to set up pilot programs at local levels using the sand box model to better promote fintech development, such as blockchain.

Ben Shenglin, executive director of the International Monetary Institute (IMI) at Renmin University of China, said regulators can first launch the sand box regulatory model by establishing pilot programs in some highly developed regions, such as Shanghai, East China's Zhejiang province, and South China's Guangdong province.

First introduced in Britain, the sand box model provides more leeway for financial innovators to test their products and services, as risks within specific regions are well controlled under regulations without incurring systematic risks, according to Ben.

Yang Dong, an economics professor at Renmin University, said the sand box model will help supervisors catch up with the latest trends to improve regulations.

China might lose the chance to understand the future growth potential of blockchain-related technology without a safety net created by the government, because regulators might worry about risks, Yang said.

China needs to first clarify different responsibilities between central and local level regulators, and local governments need to be given more freedom to oversee innovative financial products, according to Yang.