ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature Second Regular Session
	Senate: FICO DP 5-1-1-0 | 3^rd Read 16-10-4-0

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SB 1366: regulatory sandbox; blockchain

Sponsor: Senator Bolick, LD 2

Committee on Commerce

Overview

Modifies the definition of innovation relating to the Regulatory Sandbox Program (Program).

History

The Attorney General (AG) administers and oversees the Program, which enables persons to obtain limited access to Arizona's market to test innovative financial products or services or other innovations without obtaining a license or other authorization. An innovation is the use or incorporation of new or emerging technology or the reimagination of uses for existing technology to address a problem, provide a benefit or otherwise offer a product, service, business model or delivery mechanism that is not known by the AG to have a comparable widespread offering in Arizona (A.R.S. §§ 41-5601 and 41-5602).

An applicant for the Program must demonstrate to the AG 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. Upon application approval, an applicant is deemed a Program participant and given 24 months to test the innovation. The participant must retain records, documents and data produced in the ordinary course of business. If an innovation fails before the end of the testing period, the participant must notify the AG and report on actions taken to ensure consumers have not been harmed because of the innovation's failure. Before the 24-month testing period ends, the participant must notify the AG that the participant will exit the Program and cease offering any innovative products or services within 60 days after the 24-month testing period ends or seek an extension in order to pursue a license or other authorization required by law (A.R.S. §§ 41-5603; 41-5605; 41-5607 and 41-5609).

Blockchain technology is a type of distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth (A.R.S. § 44-7061).

Provisions

1. Modifies the definition of innovation as the use or incorporation of a new or existing idea or a new or emerging technology or a new use of existing technology, including blockchain technology, to address a problem, provide a benefit or offer a product, production method or service. (Sec 1)

2. Defines blockchain technology. (Sec 1)

3. Makes technical changes. (Sec 1)

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7.                   SB 1366

8. Initials PB           Page 0 Commerce

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