North Carolina Innovation Council Takes Shape to Implement New FinTech and InsurTech Regulatory Sandbox Program | Moore & Van Allen PLLC

As home to the nation’s second-largest banking hub, North Carolina has come to the forefront of innovation in the FinTech and InsurTech arenas. Late last year, Governor Cooper signed Act H624, the North Carolina Regulatory Sandbox Act of 2021 (the “Sandbox Act”), which establishes what is known as the “Regulatory Sandbox” program to encourage innovation in the development of FinTech and InsurTech products to be offered to consumers. The Regulatory Sandbox program provides a modified regulatory environment in which companies may temporarily waive licensing or other regulatory requirements to “test an innovative financial or insurance product or service and make them available to consumers on a limited basis”. The Sandbox Act also established the North Carolina Innovation Council (“Innovation Council”) to implement a program to promote “innovation, investment and job creation in North Carolina.” By entering the regulatory sandbox, North Carolina has joined less than a dozen states that have used the tool to date.

The North Carolina legislature established a regulatory sandbox program in a bipartisan effort, finding that “existing legal and regulatory frameworks limit innovation because these structures were created largely at a time when technology was not a fundamental component of industry ecosystems, including banking and insurance. “The program gives participants waiver of certain rules for up to 24 months if not extended in accordance with the terms of the charter.

The Sandbox Act empowers the Innovation Council to define guidelines, standards, and policy priorities for those types of innovations that will qualify for participation in the program, as well as responsibilities for admission to the program. The law seeks to balance the need for a relaxed regulatory environment to stimulate innovation with the requirement for the Innovation Council to consider several factors before admitting an applicant to the program, including the nature of the product or service offered and the potential risk to consumers as consumers will be protected and their complaints will be considered, as well as the experience and ability of the company to test the innovative product.

Membership of the Innovation Council took shape with the last appointment of Agnes Gambil West to Lt. Gov. Mark Robinson on January 29, 2022. Gambil West is co-chair of the North Carolina Blockchain Initiative and joins the following additional individuals who have been appointed to serve on the board:

  • Lawrence G. Baxter, Professor of Legal Practice at David T. Zhang Duke University School of Law and Business and Professional Consultant Strategic Catalytics LLC – appointed by Governor Cooper
  • Vijay Srinivasan, Senior Vice President of CGI – Appointed Governor Cooper

The board also includes Bank Commissioner Catherine Bosken or appointed Commissioner, Insurance and Fire Commissioner Mike Cozy or appointed Commissioner, Secretary of State Elaine Marshall or Designated Person, and Attorney General Josh Stein or Designated Person.

Charlotte was described as “ready to reap the benefits of the fintech industry because of the” growing population of the city, a young and talented workforce and a pioneering spirit … “. The driving force of innovation combined with the leadership of a wise legal advisor can lead to the successful realization of the potential that technology has. At Moore & Van Allen we take an interdisciplinary approach to advising our clients whose industries and business operations are centered around or under current and emerging technologies. Our attorneys have extensive and extensive experience in navigating clients on technology-related issues related to fintechnology, regulatory and responsible matters, intellectual property, cybersecurity and data privacy, mergers and acquisitions and other transactions and litigation, and litigation. high stakes affecting these areas. Feel free to contact us with any questions about how we can help you. We will keep you informed of developments concerning the NC sandbox regulatory program and the Innovation Council.

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