The Arizona Attorney General’s Office has launched the first FinTech sandbox in the United States.
Authorities across the EU and Asia have been increasingly serious about the creation of regulatory sandboxes, however, the US has been slow to follow. Arizona has now launched a sandbox, which aims to ease the regulatory burdens for entrepreneurs to test innovative FinTech products and services while remaining subject to Arizona’s consumer protection laws.
Currently, navigating state regulatory requirements can take several months and cost a startup company tens of thousands of dollars in fees. Arizona’s new FinTech Sandbox claims to provide ‘much needed relief for entrepreneurs’ by lifting some regulations and allowing innovative products and services to be live-tested in a marketplace limited to a capped number of consumers.
Its Sandbox will be administered through the Consumer Protection & Advocacy Section of the Arizona Attorney General’s Office. By doing this, it will allow the office to act quickly if necessary to protect consumers, stop deceptive acts, and work with entrepreneurs to solve problems.
Sandra Watson, president & CEO of the Arizona Commerce Authority, said: “Under Governor Ducey’s leadership, Arizona has established a position as a global front-runner in emerging technologies, including autonomous vehicles, 5G, and the sharing economy, and is also recognized as a model for regulatory reform.
“Our FinTech Sandbox – the first in the United States – is the latest example of why Arizona has earned this reputation, and we thank Attorney General Brnovich and his team for their work. We’re excited that applications are now being accepted and look forward to seeing how the program will drive innovation in the financial services industry.”
Last year, Hong Kong’s Securities and Futures Commission (SFC) launched a RegTech sandbox to enabled qualified firms to test their regulated activities. The SFC said the Regulatory Sandbox will provide a confined regulatory environment for qualified firms to conduct regulated activities utilising financial technologies (FinTech).
A few months later, the Financial Conduct Authority (FCA) began to look at the merits of creating a global FinTech sandbox following the success of its UK-focused sandbox.
Launched in 2016, its sandbox has supported 60 firms in the UK to test their ideas with real customers in the live market under controlled conditions. Its sandbox currently only allows firms to conduct tests in the UK, but this could be about to change as “many aspects of financial markets and FinTech are global,” according to a statement from the FCA.
India’s central Government also recently set up a special committee to look into making regulations for FinTech more flexible. As part of the move, the regulator said it will also examine the regulatory environment for the country’s FinTech industry, with a view of creating a regulatory sandbox.
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