Nevada further enhanced its leadership in the development of innovative financial products today when the state’s Department of Business & Industry approved regulations for its new “regulatory sandbox” initiative.
The initiative allows financial services companies to test innovative financial products — blockchain and fintech applications — without the need to meet full requirements for regulation and licensing. The Department of Business & Industry will ensure that the new products don’t harm consumers or businesses in the state.
Creation of the “regulatory sandbox” was spearheaded by State Senators Ben Kieckhefer (R-Reno) who sponsored the necessary legislation during the 2019 Legislative Session.
“The world of financial services is moving quickly to bring exciting new products to consumers and businesses, but innovation is sometimes stifled by the regulatory process,” Kieckhefer said. “The ‘regulatory sandbox’ allows financial companies to experiment and test new technology and new ideas far more easily.”
The “regulatory sandbox” also is likely to strengthen Nevada’s position as a home for highly innovative and technology savvy companies that create high-paying new jobs, Kieckhefer said.
Under the new program, companies that want to test innovative products or services in Nevada will complete an application that’s available on the Web site of the Department of Business & Industry. The director of the department will decide if the test qualifies for the “regulatory sandbox” and will detail the regulatory exemptions that are available. Decisions will be made within 90 days of the time an application is filed.
Companies will be allowed to test financial and blockchain products for two years. After that, they’ll need to end the test or apply for full licensing.
Most companies’ “regulatory sandbox” tests will be limited to working with no more than 5,000 consumers — 7,500 with special approval. The monetary size of transactions also will be generally limited to $2,500 for a single transaction or $25,000 in a series of transactions with the same consumer.
The law allows tests of a wide range of financial innovations, including initiatives in banking, mortgage lending, real-estate exchanges and escrow management.
The state will limit participation in the program. No more than three applications can be approved between now and June 30. Another three can be approved in the second half of this year. In 2021 and 2022, five applications can be approved in each half year.