On Thursday, Arizona became the first state in the nation to enact legislation removing costly and time-consuming barriers to entry on fintech companies looking to test innovative new products and services in Arizona.
Governor Ducey signed House Bill 2434, dubbed the “regulatory sandbox” into law on Thursday amidst a crowd of supporters attending the 2nd Annual Arizona Tech Summit in Phoenix. John Ragan, CEO of InvisionAZ, the newly formed technology nonprofit designed to accelerate capital funding for Arizona-based entrepreneurs attended the signing of the landmark legislation along with Glenn Hamer, president and CEO of the Arizona Chamber of Commerce & Industry and Sandra Watson, president and CEO of the Arizona Commerce Authority.
The governor was joined onstage by co-architects of the bill including State Rep. Jeff Weninger, who sponsored the legislation and played a critical role in its development; Arizona Attorney General Mark Brnovich, an ardent supporter of regulatory reform and key player in the inception of H.B. 2434; and Arizona Attorney General civil litigation chief, Paul
Watkins, who was instrumental in crafting the new law. Jeff Guldner, executive vice president and general counsel for Pinnacle West Capital Corporation and Arizona Public Service Company (APS) also joined the governor onstage for the signing along with lead lobbyist for the Arizona Chamber of Commerce & Industry, Courtney McKinstry.
Arizona startups and existing companies will have the opportunity to launch innovative financial products in the “sandbox” on a limited scale for 24 months, without being licensed or authorized to act under state laws. Companies that get accepted into the Arizona program will be allowed to forgo state licensing requirements. Most companies will be able to offer their products to as many as 10,000 consumers over a two-year period.
Arizona’s regulatory sandbox is similar the model in place in the U.K. Designed to promote innovation, U.K.’s regulatory sandbox has been credited with helping London become the foremost financial technology hub in the world.
Companies that have tested and deployed fintech products within existing international sandboxes will have a sense of regulatory certainty in Arizona when bringing their product to market in the US. This reduces a critical barrier to entry for firms seeking to penetrate the US market – a clear competitive advantage for Arizona.
Bold leadership and swift action from Governor Ducey and the forward-thinking state leaders behind this legislation ensures the international spotlight will continue to shine on Arizona.
Allison Gilbreath is the executive director of the Arizona Manufacturers Council and vice president of strategic initiatives for the Arizona Chamber of Commerce & Industry