Connecticut 2021 Regular Session Status: In Committee 2 R cosponsors

HB 5761 — AN ACT CONCERNING A REGULATORY SANDBOX PROGRAM.

Last action — FILE NO. 200

  1. ✓
    Introduced
  2. 2
    In Committee
  3. 3
    Passed House
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2021 Regular Session. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there are no live odds of enactment. It would have to be reintroduced in the current session to move again.

Bill Text

What changed in the latest version

52 added · 290 removed

52 line(s) added, 290 removed.

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General Assembly Committee Bill No.
House of Representatives General Assembly File No.
5761 January Session, 2021 LCO No.
200 January Session, 2021 Substitute House Bill No.
3253 Referred to Committee on COMMERCE Introduced by:
5761 House of Representatives, March 30, 2021 The Committee on Commerce reported through REP.
(CE) AN ACT ESTABLISHING A REGULATORY SANDBOX PROGRAM.
SIMMONS, C.
of the 144th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.
AN ACT CONCERNING A REGULATORY SANDBOX PROGRAM.
(NEW) (Effective October 1, 2021) (a) For the purposes of this section:
(Effective from passage) The Department of Economic and Community Development shall develop a plan to establish a regulatory sandbox program, which allows a person to temporarily test an innovativeproductorserviceonalimitedbasiswithoutotherwisebeing licensed or authorized to act by the laws of the state.
(1) "Applicable agency" means a department or agency of this state that may regulate the type of financial product or service that comprises an innovative product or service in the state and persons who provide such product or service, including issuances of licenses or other types of authorization, which the Department of Economic and Community Development determines would otherwise regulate a sandbox participant;
Not later than January 1, 2022, the Commissioner of Economic and Community Development shall submit recommendations for any requisite legislative proposals for the implementation of such plan to the joint standing committee of the General Assembly having cognizance of matters relating to commerce.
(2) "Applicant" means an individual or entity that is applying to participate in the regulatory sandbox;
(3) "Blockchain technology" means the use of a digital database containing records of financial transactions, which can be simultaneously used and shared within a decentralized, publicly accessible network and can record transactions between two parties in LCO No.
3253 1 of 10 Committee Bill No.5761 a verifiable and permanent way;
(4) "Commissioner" means the Commissioner of Economic and Community Development;
(5) "Consumer" means a person that purchases or otherwise enters into a transaction or agreement to receive an innovative product or service that is being tested by a sandbox participant;
(6) "Department" means the Department of Economic and Community Development;
(7) "Financial product or service" means (A) a financial product or service that requires state licensure or registration, or (B) a financial product or service that includes a business model, delivery mechanism or element that may require a license or other authorization to act as a financial institution, enterprise or other entity that is regulated by the provisions of title 36a of the general statutes or other related provisions.
"Financial product or service" does not include a product or service that is regulated by the provisions of title 38a or chapter 672a of the general statutes;
(8) "Innovation" means the use or incorporation of a new or emerging technology or a new use of existing technology, including, but not limited to, blockchain technology, to address a problem, provide a benefit or otherwise offer a product, service, business model or delivery mechanism that is not known by the department to have a comparable widespread offering in the state;
(9) "Innovative product or service" means a financial product or service that includes an innovation;
(10) "Person" means any person, including individuals, firms, partnerships, associations, cooperatives, limited liability companies or corporations, public or private, for profit or nonprofit, organized or existing under the laws of the state or any other state;
LCO No.
3253 2 of 10 Committee Bill No.5761 (11) "Regulatory sandbox" means the program established in subsection (b) of this section, which allows a person to temporarily test an innovative product or service on a limited basis without otherwise being licensed or authorized to act under any other provision of the general statutes;
(12) "Sandbox participant" means a person whose application to participate in the regulatory sandbox is approved in accordance with the provisions of this section;
and (13) "Test" means to provide an innovative product or service in accordance with the provisions of this section.
(b) There is established within the Department of Economic and Community Development the regulatory sandbox program.
Said program shall enable a person to obtain limited access to the market in this state to test innovative financial products or services without obtaining a license or other authorization that otherwise might be required.
(c) (1) Notwithstanding any provision of the general statutes, any person may submit an application to the Commissioner of Economic and Community Development to enter the regulatory sandbox to test an innovation, provided such person is subject to the jurisdiction of the state and has established a physical location in the state, from which testing will be developed and performed and where all records, documents and data relating to such innovation will be maintained.
Applications to enter the regulatory sandbox shall be submitted to the commissioneratsuchtimesandonsuchformsasthecommissioner may prescribe.
(2) Each application shall include, but need not be limited to:
(A) Relevant personal and contact information for the applicant, including legal name, address, telephone number, email address, Internet web site address and any other information required by the commissioner;
(B) disclosure of any criminal convictions of the applicant and other LCO No.
3253 3 of 10 Committee Bill No.5761 personnel who will participate in the testing of the innovation;
(C) documentation that demonstrates to the commissioner's satisfaction that the applicant has the necessary personnel, financial and technical expertise, access to capital and a plan to test, monitor and assess the innovative product or service;
(D) a description of the innovative product or service to be tested, including statements regarding the following:
(i) How the innovative product or service is subject to licensing or other authorization requirements outside of the regulatory sandbox;
(ii) how the innovative product or service would benefit consumers;
(iii) how the innovative product or service is different from other products or services available in this state;
(iv) what risks may confront consumers that use or purchase the innovative product or service;
(v) how participating in the regulatory sandbox would enable a successful test of the innovative product or service;
(vi) a description of the proposed testing plan, including estimated time periods for beginning the test, ending the test and obtaining licensure or authorizations after the testing is complete;
(vii) a description of how the applicant will end the test and protect consumers if the test fails;
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and (viii) how the applicant will employ cybersecurity measures to avoid breaches and protect consumer and transaction data.
After an application is filed, the commissioner may request any additional information from the applicant that the commissioner deems necessary to assess such application.
(3) The Department of Economic and Community Development may charge any applicant an application fee in an amount determined by the commissioner.
(4) An applicant shall submit a separate application for each innovative product or service that the applicant intends to test.
(5) In reviewing an application under this subsection, the commissioner shall:
(A) In consultation with each applicable agency, determine (i) whether the applicable agency has previously issued a license or other authorization to the applicant, (ii) whether the LCO No.
3253 4 of 10 Committee Bill No.5761 applicable agency has previously investigated, sanctioned or pursued legal action against the applicant, (iii) whether the applicant could obtain a license or other authorization from the applicable agency after exiting the regulatory sandbox, and (iv) whether certain licensure or other regulations should not be waived even if the applicant is accepted into the regulatory sandbox;
(B) obtain approval from each applicable agency for the applicant to enter the regulatory sandbox;
and (C) consider whether a competitor to the applicant is or has been a sandbox participant and, if so, favor allowing the applicant to become a sandbox participant.
(6) If the commissioner and each applicable agency approve admitting an applicant into the regulatory sandbox, such applicant may become a sandbox participant.
(7)Thecommissioner maydenyanyapplicationsubmittedunderthis subsection for any reason, at the commissioner's discretion.
(8) Not later than ninety days after a complete application is received by the commissioner, the commissioner shall inform the applicant as to whethersuchapplicationisapproved,exceptthatthecommissionerand the applicant may mutually agree to extend the time period for the commissioner to determine whether an application is approved.
If the commissioner denies an application, the commissioner shall provide a written description of the reasons for the denial to the applicant.
(d) (1) If the commissioner approves an application under subsection (c) of this section, the sandbox participant may test the innovative product or service described in such sandbox participant's application for twenty-four-months after the date of such application's approval.
(2) An innovative product or service that is tested within the regulatory sandbox is subject to the following limitations:
(A) Consumers of such innovative product or service shall be residents of the state;
(B) the department may, on a case-by-case basis, specify the maximum number of consumers that may transact through or enter into LCO No.
3253 5 of 10 Committee Bill No.5761 an agreement to use the innovative product or service;
(C) for a sandbox participant testing a consumer loan, the department may, on a case-by- case basis, specify the maximum amount of an individual loan that may be issued to an individual consumer or the maximum amount of aggregate loans that may be issued to an individual consumer;
and (D) for a sandbox participant testing an innovative product or service that would normally require a money transmission license under section 36a-597 of the general statutes, the department may, on a case-by-case basis, specify the maximum amount of a single transaction for an individualconsumer or themaximumaggregate amount oftransactions for an individual consumer.
(3) This subsection shall not be construed to restrict a sandbox participant who holds a license or other authorization in another jurisdiction from acting in accordance with such license or other authorization.
(4) A sandbox participant shall be deemed to possess an appropriate license under the laws of this state for the purposes of any provision of federal law requiring state licensure or authorization.
(5) Except as otherwise provided in this section, a sandbox participant that is testing an innovative product or service is not subject to state laws that regulate financial products and services.
(6) (A) The commissioner may apply any provision of the general statutes that regulates a financial product or service to a sandbox participant if the commissioner determines that:
(i) An applicant's plan to protect consumers will not adequately protect consumers from the harm that such provision addresses;
and (ii) the benefits to consumers of applying such provision outweigh the potential benefits to consumers from increased competition, innovation and consumer access that waiving such provision, in conjunction with the applicant's ability to compensate consumers who may be harmed, would provide;
and (B) if the commissioner determines that certain provisions of the general statutes that regulate a financial product or service apply to a LCO No.
3253 6 of 10 Committee Bill No.5761 sandbox participant, the commissioner shall notify the sandbox participant of such applicable provisions.
(7) Notwithstanding any other provision of this section, a sandbox participant shall not have immunity related to any criminal offense committed during the sandbox participant's participation in the regulatory sandbox.
(8) By written notice, the commissioner may end a sandbox participant's participation in the regulatory sandbox at any time and for any reason, including if the commissioner determines a sandbox participant is not operating in good faith to bring an innovative product or service to market.
(e) (1) Before providing an innovative product or service to a consumer, a sandbox participant shall disclose the following to the consumer:
(A) The name and contact information of the sandbox participant;
(B) that the innovative product or service is authorized pursuant to the provisions of this section and, if applicable, that the sandbox participant does not have a license or other authorization to provide such product or service under any other provision of the generalstatutes;(C)thattheinnovativeproductorserviceisundergoing testing and may not function as intended and may expose the customer to financial risk;
(D) that the provider of the innovative product or service may be civilly liable for any losses or damages caused by the innovative product or service;
(E) that the state does not endorse or recommend the innovative product or service;
(F) that the innovative product or service is a temporary test that may be discontinued at the endofthetesting period;(G) theexpectedend date ofthetesting period;
and (H) that a consumer may contact the Department of Economic and Community Development to file a complaint regarding the innovative product or service being tested and provide the department's telephone number and Internet web site address where a complaint may be filed.
(2) The disclosures required pursuant to subdivision (1) of this subsection shall be provided to a consumer in a clear and conspicuous LCO No.
3253 7 of 10 Committee Bill No.5761 form and, for an Internet or application-based innovative product or service, a consumer shall acknowledge receipt of the disclosure before a transaction may be completed.
(3) The department may require that a sandbox participant make additional disclosures to a consumer.
(f) (1) At least thirty days before the end of the twenty-four-month regulatory sandbox testing period, a sandbox participant shall:
(A) Notify the department that the sandbox participant will exit the regulatory sandbox discontinue the test and will cease offering any innovative product or service in the regulatory sandbox within sixty days after the day on which the twenty-four-month testing period ends;
or (B)seek anextensioninaccordance withsubsection (g)ofthissection.
(2) Subject to the provisions of subdivision (3) of this subsection, if the department does not receive notification as required by subdivision (1) of this subsection, the regulatory sandbox testing period shall end at the end of the twenty-four-month testing period and the sandbox participant shall immediately cease offering each innovative product or service being tested.
(3) If a test includes offering an innovative product or service that requires ongoing duties, such as servicing a loan, the sandbox participant shall continue to fulfill those duties or arrange for another person to fulfill those duties after the date on which the sandbox participant exits the regulatory sandbox.
(g) (1) A sandbox participant shall retain records, documents and data produced in the ordinary course of business regarding an innovative product or service tested in the regulatory sandbox.
(2) If an innovative product or service fails before the end of a testing period, the sandbox participant shall notify the Department of Economic and Community Development andreport on actions takenby the sandbox participant to ensure consumers have not been harmed as LCO No.
3253 8 of 10 Committee Bill No.5761 a result of the failure.
(3) The commissioner may establish periodic reporting requirements for a sandbox participant.
(4)Thecommissioner may request records,documentsand data from a sandbox participant and, upon the department's request, a sandbox participant shall make such records, documents and data available for inspection by the department.
(5) If the commissioner determines that a sandbox participant has engaged in, is engaging in or is about to engage in any practice or transaction that is in violation of this section or that constitutes a violation of state or federal criminal law, the commissioner may remove a sandbox participant from the regulatory sandbox.
(h) On or before January 1, 2022, and annually thereafter, the Commissioner of Economic and Community Development shall submit areport,inaccordancewiththeprovisionsofsection11-4aofthegeneral statutes, concerning the regulatory sandbox program to the joint standing committee of the General Assembly having cognizance of matters relating to commerce.
Such report shall include the number of applicants to the regulatory sandbox program, the number of sandbox participants, descriptions of each innovative product or service being tested in the regulatory sandbox and any recommendations for further legislative action.
Section 1 October 1, 2021 New section Statement of Purpose:
Section 1 from passage New section sHB5761 / File No.
To establish a regulatory sandbox program, which allows a person to temporarily test an innovative product or service on a limited basis without otherwise being licensed or authorized to act by the laws of this state.
200 1 sHB5761 File No.
LCO No.
200 CE Joint Favorable Subst.
3253 9 of 10 Committee Bill No.
sHB5761 / File No.
5761 [Proposed deletions are enclosed in brackets.
200 2 sHB5761 File No.
Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.] Co-Sponsors:
200 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.
REP.
In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.
YACCARINO, 87th Dist.;
Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.
REP.
OFA Fiscal Note State Impact:
ZAWISTOWSKI, 61st Dist.
None Municipal Impact:
H.B.
None Explanation It is anticipated that the Department of Economic Community Development could develop the plan required under the bill without requiring additional resources.
5761 LCO No.
The Out Years State Impact:
3253 10 of 10
None Municipal Impact:
None sHB5761 / File No.
200 3 sHB5761 File No.
200 OLR Bill Analysis sHB 5761 AN ACT CONCERNING A REGULATORY SANDBOX PROGRAM.
SUMMARY The Office of Legislative Research does not analyze Special Acts.
COMMITTEE ACTION Commerce Committee Joint Favorable Substitute Yea 20 Nay 2 (03/16/2021) sHB5761 / File No.
200 4
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Action History

  1. FILE NO. 200

  2. HOUSE CALENDAR NUMBER 171

  3. FAV. RPT., TABLED FOR HOUSE CALENDAR

  4. RPTD. OUT OF LCO

  5. REFERRED TO Office of Legislative Research AND Office of Fiscal Analysis 03/29/21

  6. FILED WITH LCO

  7. Joint Favorable Substitute

  8. PUBLIC HEARING 0216

  9. REF. TO JOINT COMM. ON Commerce

  10. DRAFTED BY COMMITTEE

  11. Vote to Draft

  12. REF. TO JOINT COMM. ON Commerce

Sponsors

Sponsorship breakdown

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3 sponsors · 0 co-sponsors · 184 not signed on

Sponsors (3)

Co-sponsors (0)

None.

Not signed on (184)

184 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

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Subjects

finance technology
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Frequently asked questions

Who sponsors HB 5761?
HB 5761 is sponsored by Dave W. Yaccarino (Republican), Cheeseman, Holly H., and Tami Zawistowski (Republican).
What is the current status of HB 5761?
This bill died with 2021 Regular Session. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track HB 5761?
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