The regulatory Sandbox allows innovators to trial or launch new products, services, methodologies and business models without some of the usual rules applying. Waivers are issued to approved applicants of specified requirements imposed by statute or rule, or portions thereof, if these statutes or rules do not currently permit the product or service to be made available to consumers.
The Council oversees the submission of applications and approves admission into the Sandbox program, assigns participants to the appropriate State agency, and establishes operational rules. It also sets conditions for regulatory waivers and manages participant termination or removal as needed.
The General Assembly recognized the banking and insurance industries as key economic drivers and acknowledged the transformative impact of FinTech, InsurTech, and emerging technologies. However, outdated legal frameworks can restrict innovation. To foster growth, the State aimed to modernize regulations, incorporate blockchain and smart contract taxonomy, and create a more business-friendly environment.
Certain innovative products or services that support the provision of banking or financial services.
Certain innovative products or services that support the provision of insurance services.
Providing a financial or insurance product or service or a substantial component of such, or using or incorporating new or emerging technology, including blockchain technology, or developing a new use of existing technology to address a problem, provide a benefit or otherwise offer a product, service, business model or delivery mechanism to the public that is not known at present to have a comparable widespread offering in this State.
The North Carolina Sandbox Act (G.S. 169) was passed in 2021, establishing the NC Innovation Council as its oversight body. Council members were appointed, and the inaugural meeting took place in September 2021. In August 2024, an Executive Director was appointed, officially launching the Regulatory Sandbox program.
The Sandbox program is expected to provide regulators and policymakers with valuable insights into emerging market innovations, the challenges faced by innovators, and consumer experiences. It will enable flexible support, foster informed policymaking, and help shape long-term regulatory frameworks.
The Sandbox is for innovators who already (or intend to) operate in a regulated finance or insurance market. It’s available to start-ups, entrepreneurs, established sector players, businesses transferring in from other sectors, public or nonprofit organizations.
The proposed activity showcases innovative advancements and presents a strong potential for consumer benefits. The applicant clearly identifies a regulatory barrier hindering their business use case. The application is either market-ready or nearing market readiness. Additionally, a robust risk monitoring and evaluation plan is in place, along with a well-structured exit strategy.
The application can be found on the website at www.innovation.nc.gov. An application fee of $50 must be paid before an application is deemed submitted.
Any products or services that meet the definition of innovation, noted in question #6 are potentially eligible.
The applicant business must have a physical presence in North Carolina.
The Sandbox period can be up to 24 months. Businesses may seek an extension of not more than 12 months to obtain proper licensing and authorization to launch the product or service more widely.
If the sandbox participant cannot obtain or does not seek regulatory compliance within 90 days following the expiration of the sandbox period, the participant shall wind down operations with existing consumers within 90 days after the conclusion of the sandbox period, as directed by the applicable State agency.
Before offering an innovative product or service to consumers, a Sandbox participant must fully disclose that the product or service is part of the Sandbox program and outline any potential risks. Additionally, a consumer protection bond, or alternatively, a deposit of cash or readily marketable securities are required to ensure restitution for any financial harm resulting from the Sandbox test.
Yes. There is an application fee of $50 and if approved there are participation fees.
Upon receiving feedback and recommendations from relevant state regulatory agencies, the NC Innovation Council makes the final decision on application submissions.
A monitoring and evaluation plan is required to be submitted with all applications and requires the applicant to periodically measure the success or risks of the innovative product or service during and at the end of the sandbox period.
In general, all participants are required to keep records produced in the ordinary course of business. This includes but is not limited to advertising materials, accounting workbooks, drafts of model contracts and forms, signed contracts and forms, communications between the business and consumers, data in its native format, and any metadata. A detailed scope of the required records and timelines for management of, will be developed as a part of the Waiver Agreement.
Yes. Partners and their roles need to be detailed in the application.
The Council will strive to make decisions for completed applications within 90 days of receiving all materials needed to approve or deny and application.
Consumer complaints should be submitted to the North Carolina Department of Justice or call (877) -5-NO-SCAM. For complaints regarding the Sandbox program those concerns can be emailed to NCRegulatorySandbox@nc.gov.
The Executive Director at NCRegulatorySandbox@nc.gov.