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Arizona is a top tech city and has become the first state in the U.S. to adopt a regulatory fintech sandbox

Things to know about Arizona’s FinTech sandbox

In March 2018, Governor Doug Ducey signed House Bill 2434 into law making Arizona the first state in the nation to enact a groundbreaking regulatory FinTech “sandbox.” Arizona joins countries such as the United Kingdom, Singapore, United Arab Emirates, and Australia in encouraging FinTech investment by instituting sandboxes.

In Arizona’s sandbox, startups, entrepreneurs and even established companies can launch products on a limited, temporary scale to consumers to test innovative products, services, business models and delivery mechanisms in the real market without incurring the regulatory costs and burdens that would otherwise be imposed. The Arizona Attorney General’s Office will administer the sandbox. The bill also includes a reciprocity provision permitting the Attorney General to enter into agreements that would allow Arizona sandbox participants to operate in other jurisdictions that establish similar programs.

Learn more about the sandbox, eligibility requirements and how we can help you with the application.

Overview of the regulatory sandbox program:

    • The State’s FinTech Sandbox is the first of its kind in the United States and will allow companies to develop, test, and deploy innovative products without licensure or authorization for up to 2 years, with a possibility of a one-year extension.
    • Participation in our sandbox provides an opportunity for companies for reduce compliance costs and accelerate their go-to-market strategies for innovative FinTech products with clear regulatory guidance and cooperation from local policymakers.
    • Regarding physical location, the company has to be under the jurisdiction of the AG through incorporation, residency, or presence agreement and must have either a physical or virtual location that is accessible to the attorney general where required records and data will be maintained.
    • User base for FinTech product is capped at 10,000 customers. However, the attorney general may allow companies in the sandbox to transact with up to 17,500 customers if the company is financially solvent and has proper risk management protocols in place.
    • The Office of the Attorney General is responsible for approving and providing entry of applicants into the sandbox.
    • The sandbox program will be administered by the Civil Division of the office.
    • The application fee amounts to $500, determined by the Attorney General’s Office
    • Sandbox participants must provide detailed information regarding their service or product on a form prescribed by the Attorney General’s Office.
    • Sandbox participants will have 24 months after their approval date to test their innovative financial product or service.
    • A sandbox participant may be granted an extension of up to one year upon request to the Attorney General’s Office.
    • Consumers must be Arizona residents.
    • The sandbox provides caps on the numbers of individuals who may participate in a particular sandbox agreement and caps on the amount of loans that may be issued.
    • The Arizona Consumer Fraud Act guides all products and services offered in the sandbox and any product offered in the sandbox must comply with all statutory limits and caps in Arizona law related to financial transactions.
    • The program ends on July 1, 2028.


Learn more about the sandbox, eligibility requirements and how we can help you with the application.