Nevada is already leading the nation with regard to economic and technological growth despite its subpar education system, but with the approval of a new “regulatory sandbox” by the Department of Business & Industry, the battle born state is now in a position to become an innovator in financial technology products as well.
The new initiative allows financial services companies to test innovative financial products — blockchain and fintech applications — without the need to adhere to the full requirements for regulation and licensing.
“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,” said State Senators Ben Kieckhefer (R-Reno). “The ‘regulatory sandbox’ allows financial companies to experiment and test new technology and new ideas far more easily.”
And although the “regulatory sandbox” was spearheaded by State Senators Ben Kieckhefer (R-Reno) who sponsored the legislation during the 2019 Legislative Session. It will be up to the Department of Business & Industry to make sure that the new products don’t harm consumers or businesses in the state.
According to Kieckhefer, the “regulatory sandbox” also is likely to strengthen Nevada’s position as a home for tech savvy companies that create high-paying jobs.
Under the new program, companies that want to test financial products or services in Nevada will complete an application that’s available on the Department of Business & Industry website.
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 will also 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.
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