The North Carolina Regulatory Sandbox Act of 2021 has been signed into law making the state one of a handful that are 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 highly for its business friendly government. It is also a top financial services hub and claims to be the second largest banking center after New York with Bank of America calling Charlotte, NC its home.
The legislation states:
“The General Assembly finds that the banking and insurance industry is a major economic driver for the State. The General Assembly also finds that Fintech, Insurtech, and other emerging technologies are undergoing a transformational period and providing greater automation, connectivity, transparency, and opportunity for related products and services. The General Assembly recognizes that these new technologies hold the key for future growth across the State. Further, the General Assembly finds that existing legal and regulatory frameworks are restricting innovation because these frameworks were established largely at a time when technology was not a fundamental component of industry ecosystems, including banking and insurance. Since innovators require a flexible regulatory regimen to test new products, services, and emerging technologies, such as blockchain technology, the General Assembly also finds that adopting taxonomy related to blockchain, smart contracts, and other emerging technologies into State law would provide legal and regulatory clarification and create a more attractive jurisdiction for businesses and individuals who aim 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 may apply for a small fee to participate in the program. If approved, these firms will have 24 months to test the innovative product or service. Blockchain is mentioned multiple times in the document.