Arizona might launch a regulatory sandbox for Fintech (UPDATE — Draft Bill Text)
This week, Arizona Attorney General Mark Brnovich announced his desire to create a fintech regulatory sandbox in Arizona in an op-ed. In…
This week, Arizona Attorney General Mark Brnovich announced his desire to create a fintech regulatory sandbox in Arizona in an op-ed. In his announcement, Attorney General Brnovich acknowledges that the state-by-state regulatory system for non-bank fintech firms is burdensome, but he also embraces the unique role that the states can play in supporting fintech innovation and the important role innovation and competition play in protecting consumers.
While the exact nature of the sandbox has yet to be determined, this is a positive sign. Instead simply trying to prevent regulatory innovation via litigation, Arizona is competing to create a welcoming environment for fintech firms seeking to try out new methods of serving customers. Encouragingly, AG Brnovich acknowledges that other states should stand up their own sandboxes and the federal government should provide the regulatory relief necessary and appropriate to help these sandboxes work. Of course, the (Sun) Devil will be in the details. The desire to encourage innovation is one thing, but the state will also need to stick the execution. However, it is unambiguously good that states are starting to truly embrace the role of financial innovation facilitator. While I anxiously wait to see how those details shake out, I salute AG Brnovich and Arizona’s spirit and hope it is just the first of many experiments in the Laboratories of Democracy.
UPDATE: The legislative proposal text for the sandbox bill is available here. I will do an analysis when time allows.