NORTH CAROLINA REGULATORY SANDBOX ACT.

View NCGA Bill Details2021
House Bill 624 (Public) Filed Tuesday, April 20, 2021
AN ACT TO ENACT THE NORTH CAROLINA FINANCIAL AND INSURANCE REGULATORY SANDBOX ACT AND TO ESTABLISH THE NORTH CAROLINA INNOVATION COUNCIL.
Intro. by Saine, Turner, Lofton, Szoka.

Status: Ch. SL 2021-166 (Oct 15 2021)

SOG comments (1):

Long title change

Senate committee substitute to the 2nd edition changed the long title. Previous long title was AN ACT TO ENACT THE NORTH CAROLINA FINANCIAL AND INSURANCE REGULATORY SANDBOX ACT AND TO ESTABLISH THE NORTH CAROLINA FINANCIAL AND INSURANCE INNOVATION COMMISSION.

Bill History:

H 624/S.L. 2021-166

Bill Summaries:

  • Summary date: Oct 18 2021 - More information

    AN ACT TO ENACT THE NORTH CAROLINA FINANCIAL AND INSURANCE REGULATORY SANDBOX ACT AND TO ESTABLISH THE NORTH CAROLINA INNOVATION COUNCIL. SL 2021-166. Enacted Oct. 15, 2021. Effective Oct. 15, 2021.


  • Summary date: Sep 22 2021 - More information

    Senate committee substitute to the 3rd edition makes the following changes.

    Amends GS 169-7 by providing that a sandbox participant may be required to post a consumer protection bond, or alternatively, a deposit of cash or readily marketable securities, with the applicable State agency. Also adds that no later than 30 days before the end of the sandbox period, a sandbox participant may request an extension of no more than 12 months in order to obtain a license or other authorization required by law. Requires the applicable State agency to grant or deny the extension request by the end of the sandbox period. Requires the Innovation Council and the applicable State agency to provide an expedited process for an innovative product or service that is substantially similar to a product or service for which a waiver has previously been granted.

    Amends GS 169-8 by adding that nothing in this act affects the applicable State agency's exercise of its authority with respect to the efficacy of an innovative insurance product or service or limit the ability of an applicable State agency to ensure the financial capability of a sandbox participant transacting business with consumers.

    Changes the act's effective date from October 1, 2021, to when the act becomes law.


  • Summary date: Sep 21 2021 - More information

    Senate committee substitute to the 2nd edition makes the following changes.

    Amends the act's long title by correcting the name of the Council.

    Makes a clarifying change to the appointment of members of the North Carolina Innovation Council under GS 169‑4.

    Adds to GS 169-8, stating that new GS Chapter 169 does not allow the Council or an applicable State agency to grant an innovation waiver that alters or amends Article 12 of GS Chapter 20 (Motor Vehicle Dealers and Manufacturers Licensing Law).


  • Summary date: Jun 15 2021 - More information

    House committee substitute to the 1st edition makes the following changes.

    Amends proposed GS Chapter 169, the North Carolina Regulatory Sandbox Act of 2021, as follows. Revises the NCGA findings related to the banking and insurance industry and related emerging technology to provide for their statewide importance (was regional). 

    Modifies and adds to the provisions establishing and governing the NC Innovation Council (Council) in new GS 169-4 as follows. Makes technical and clarifying changes to the provisions setting forth the four Council members legislatively appointed. Provides for Council members to serve four-year terms, beginning on October 1, 2021, except that the initial terms of half of the gubernatorially and legislatively appointed members are for a term of two years, and four years thereafter. Bars serving more than two consecutive terms. Provides for filling vacancies and the Secretary of State to call the first meeting where the Council must elect an ex-officio member to serve as chair and an appointed member to serve as vice-chair for a two-year term. Requires the Council to meet at least quarterly. Now allows for Council members to receive per diem compensation and necessary travel and subsistence expenses while engaged in the official discharge of their official duties as is provided by law for members of State boards and commissions (previously provided for reasonable travel expenses only).

    Makes a technical correction to require the Council to consider the nature of the innovative product or service (was the innovation product or service) proposed in a regulatory sandbox application pursuant to new GS 169-6.

    Adds to GS 169-8, stating that new GS Chapter 169 does not allow the Council or an applicable State agency to grant an innovation waiver that alters or amends GS Chapters 24 (Interest), 25A (Retail Installment Sales Act), 25B (Credit), or 75 (Monopolies, Trusts, and Consumer Protection), or Article 15 of GS Chapter 53 (Consumer Finance Act), Article 70 of GS Chapter 58 (Collection Agencies), Article 20 of GS Chapter 66 (Loan Brokers), or any other criminal or consumer protection laws.

    Makes a technical correction to the confidentiality provisions of GS 169-10, providing that the statute does not prohibit a sandbox participant from disclosing information (was disclosing) to an insurance carrier for purposes of obtaining insurance coverage required for participation in the sandbox program. 


  • Summary date: Apr 20 2021 - More information

    Identical to S 470, filed 4/1/21.

    Enacts new GS Chapter 169, to be known as the North Carolina Regulatory Sandbox Act of 2021. Sets out and defines terms as they are used in the Chapter, including defining regulatory sandbox, sandbox, or sandbox program as the program established by this Chapter that permits a person or entity to temporarily test an innovative financial or insurance product or service (as defined in the act) and make it available to consumers on a limited basis without being subject to certain licensing or other regulatory obligations imposed under applicable State law. Includes numerous NCGA findings related to the banking and insurance  industry as well as emerging technology.

    Allows a person who makes an innovative product or service available to consumers in the regulatory sandbox to be granted a waiver of specified requirements imposed by statute or rule, if these statutes or rules do not currently allow the product or service to be made available to consumers. Specifies that the waiver is to be no broader than necessary to accomplish the purposes set forth in this Act. Sets the duration of the wavier as the duration of participation in the regulatory sandbox, not to exceed 24 months from the date of admission into the regulatory sandbox program unless granted an extension.

    Establishes the 11-member North Carolina Innovation Council (Council) to support innovation, investment, and job creation within the state by encouraging participation in the regulatory sandbox. Gives the Council the power to set standards, principles, guidelines, and policy priorities for the types of innovations that the regulatory sandbox program will support. Makes the Council responsible for admission into the regulatory sandbox program and for assigning selected participants to the applicable State agency. Sets out membership on the Council, including expertise requirements for the public members; prohibits paying members compensation except reasonable travel expenses.

    Allows a designated nonprofit organization that has been authorized by the Office of the Secretary of State to be recognized as partners that may help sandbox applicants navigate the application process. Also allows certain participating nonprofit organizations to assist sandbox participants with the design and implementation of products and services during the regulatory sandbox program period. Sets out the application process for nonprofits. Also allows those nonprofit partners to explore, provide input, analyze, and make recommendations with respect to innovations and the application of innovative technologies that would benefit the state, its consumers, and its industry.

    Allows entities to apply to participate in the regulatory sandbox by submitting an application to the Council. Sets a $50 application fee and a $450 fee to participate in the 24-mnth sandbox period. Allows for additional participation fees. Require applicants to be a corporation or other organized entity with a physical presence in North Carolina. Sets out six items the Council is to consider when determining admission, including the nature of the innovation product or service proposed, including the potential risk to consumers; whether the entity's management has the necessary expertise to conduct a pilot of the innovative product or service during the sandbox period; and whether any person substantially involved in the development, operation, or management of the innovative product or service has been convicted of or is currently under investigation for fraud or State or federal securities violations. Allows the Council to deny an application in its discretion, but requires defined reasons to be given. Sets out the process by which an applicant may resolve the denial; denies judicial review.

    Upon approval, gives an applicant 24 months to test the innovative product or service; allows the period to be extended by agreement of the applicable State agency. Requires innovations to be offered only to customers who are state residents, with a qualified exception for products or services associated with money transmitters; allows the applicable State agency to cap the number of participants, which may be increased by agreement. Allows the Council or State agency to publish a list of participants or innovation waivers. Allows requiring participants to post a consumer protection bond, or alternatively, a deposit of cash or marketable securities. Require a final report at the end of the sandbox period. Provides that if the sandbox participant cannot obtain regulatory compliance within 90 days following the expiration of the sandbox period, the participant must wind down operations with existing consumers within 90 days after the conclusion of the sandbox period; sets out actions that may be taken after that period. Sets out notice requirements to be met when a participant's business objectives fail before the end of the testing period.

    Require a participant to make four specified disclosures to consumers before offering an innovative product or service, including that the innovative product or service is authorized under the regulatory sandbox for a temporary testing period and that neither the State nor any of the State agencies endorse or recommend the innovative product or service and is not subject to any liability for losses or damages caused by the product or service. Requires specified records, documents, and data to be kept for five years. Allows the applicable State agency to set reporting requirements.

    Sets out provisions governing the confidentiality of various personal information and documents and materials; provides for when certain information may be disclosed.

    Allows the Council to explore, receive input, analyze, and make recommendations, with respect to blockchain initiatives and their application. Defines blockchain technology as an electronic method for storing cryptographically secure data in a database or distributed ledger technology that is decentralized, consensus-based, mathematically verified, and distributed across multiple locations.

    Deems a participant to possess an appropriate license under the State's laws for purposes of any provision of federal law that requires State licensure or authorization. Allows the Council to enter into agreements with other State, federal, or foreign regulators to advance the purpose of the regulatory sandbox. Specifies that this Chapter allows persons, applicants, or entities authorized in other jurisdictions or that hold a license in other jurisdictions to be recognized as sandbox participants in this state.

    Effective October 1, 2021.


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