Utah Unveils FinTech Sandbox Program
Attention FinTechs: the Beehive State is calling. As Deseret News reports, this week the Utah Department of Commerce Tuesday announced the formation of a regulatory sandbox. Under this program, participants will be allowed to test various new financial products and services that would typically require a license. However these overrides will be limited and participants will be overseen by Utah’s Department of Commerce, which will also handle the application process.
In a statement about the program, Utah State Representative Marc Roberts said, “I’m excited about Utah’s regulatory sandbox and the chance it will give FinTech companies and entrepreneurs in Utah the chance to take innovative products and ideas to market without having to jump through the traditional regulatory hoops and licensing requirements which can be burdensome and costly. He went on to declare, “This is good for Utah and the future of FinTech innovation.”
Utah’s new FinTech sandbox is the nation’s second such statewide regulatory program, following neighboring Arizona. Last year Grand Canyon State governor Doug Ducey signed House Bill 2434 into law. Meanwhile federal sandboxes have also been considered but, as Arizona Attorney General Mark Brnovich noted at the time his state’s program was established, “Congress is moving at a glacial pace.”
One of the reasons a federal program has been stalled is due to concern that a lack of regulation on financial companies could harm consumers. However, Roberts argues that the sandbox set-up doesn’t mean that the participating companies aren’t being kept in check. As he told the Deseret News, “This (program) says we’re going to waive the requirement to get the license right now, but we’re still going to vet you and monitor you. But go ahead and try your product out on a limited basis and see if it works.” Additionally Weber State University associate professor Randy Boyle defended the state’s decision, noting that the program could actually be good for consumers. He explained, “It provides a lot of benefits to consumers, much like an experimental drug. If an experimental drug works, consumers win in a big, big way.”
Considering that a full year passed between the time the first and second states introduced a FinTech sandbox program, it’s hard to argue that the idea is catching fire. Regardless the news that another state is testing the concept is encouraging. Plus, as results from tests in Arizona and now Utah come in, hopefully they’ll encourage other states — and perhaps even the Feds — to come aboard.