State of North Carolina Adds FinTech Sandbox to Encourage Innovation in Financial Services

The North Carolina Regulatory Sandbox Act of 2021 was enacted, making the state one of the few seeking to encourage innovation in financial services. The Mountaineer reported that the legislation received unanimous support in both the State House and Senate.

North Carolina is consistently ranked high for its business-friendly government. It is also a premier financial services center and claims to be the second largest banking center after New York with Bank of America calling Charlotte, NC its home.

The legislation specifies:

“The General Assembly notes that the banking and insurance sector is a major economic engine for the State. The General Assembly also notes that Fintech, Insurtech and other emerging technologies are going through a period of transformation and offering automation, connectivity, transparency and increased opportunities for related products and services. The General Assembly recognizes that these new technologies hold the key to future growth across the state. In addition, the General Assembly notes that existing legal and regulatory frameworks constrain innovation as these frameworks were established largely at a time when technology was not a fundamental component of industrial ecosystems, including banking and insurance. As innovators need a flexible regulatory regime to test new products, services and emerging technologies, such as blockchain technology, the General Assembly also notes that the adoption of taxonomy related to blockchain, contracts smart and other emerging technologies in state law would provide legal and regulatory benefits. clarification and create a more attractive jurisdiction for companies and individuals wishing to do business in the state.

The legislation also establishes the North Carolina Innovation Council to help guide investment as well as innovation. Interested parties can request a small fee to participate in the program. If approved, these companies will have 24 months to test the innovative product or service. The blockchain is mentioned several times in the document.

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