State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2177: regulatory sandbox program; amendments

PRIME SPONSOR: Representative Weninger, LD 17

BILL STATUS: Commerce

 

 

Overview

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteMakes revisions to statute governing the Regulatory Sandbox Program (Program).

History

Laws 2018, Chapter 44 established the Program which permits a person limited access to the Arizona market to test innovative financial products or services without licensure or other required authorization.  The innovations that may be tested are subject to certain restrictions.  Products or services regarding most types of credit extending services, such as peer-to-peer lending and online marketplace lending, as well as money transmission and investment management would be eligible (A.R.S. § 41-5601).

For entry into the Program, applicants must apply with the Attorney General (AG), who oversees and enforces the Program.  Applicants must demonstrate that they have an adequate understanding of the innovation and a sufficient plan to test, monitor and assess the innovation while ensuring consumers are protected from a test's failure.  The AG must accept and review each application.  After the application is submitted, the AG has 90 days to notify the applicant as to whether the application is approved or denied.  Upon approval, the Program participant is assigned a registration number and has 2 years to test their innovation.

Provisions

1.       Clarifies a person who holds a license for a regulated financial product or service must file an application for innovations outside of the scope of such license. (Sec. 2)

2.       Allows the Program application to include how the applicant will employ cybersecurity measures to avoid breaches and protect consumer and transaction data. (Sec. 2)

3.       Specifies money transmitters may only be required to have a physical presence in the state at the time of the transaction, rather than be an Arizona resident. (Sec. 3)

4.       Removes the requirement for Program participants of investment management innovations to maintain and preserve books and records in accordance with federal law. (Sec. 3)

5.       Clarifies Program participants are not subject to agency licensing requirements that would or may regulate the innovation. (Sec. 3)

6.       Specifies the Attorney General alone enforces the state regulatory laws applicable to Program participants. (Sec. 3)

7.       Clarifies Program participants may obtain, record, provide, or maintain any information, record, or disclosure in electronic form. (Sec. 3)

8.       Allows Program participants to request an increase in the cap on consumer testers.

a.       Requires the AG to approve or deny the request within 30 days.

b.       Asserts the denial is not an appealable agency action. (Sec. 5)

9.       Modifies the following definitions: applicable agency, consumer, financial product or service, innovation, regulatory sandbox, and sandbox participant. (Sec. 1)

10.   Makes technical and conforming changes. (Sec. 2, 3, 4, 6)

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14.   Fifty-fourth Legislature                       HB 2177

15.   First Regular Session                            Version 1: Commerce

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