Assigned to FICO AS VETOED
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
VETOED
FACT SHEET FOR S.B. 1366
regulatory sandbox; blockchain
Purpose
Expands the definition of innovation for the purposes of the Arizona Regulatory Sandbox
Program (Sandbox).
Background
The Attorney General (AG) administers and oversees the Sandbox, which enables persons
to obtain limited access to Arizona's market to test innovative financial products or services or
other innovations without obtaining a license or other authorization. An innovation is the use or
incorporation of new or emerging technology or the reimagination of uses for existing 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 AG to have a comparable widespread offering in
Arizona (A.R.S. §§ 41-5602 and 41-5601).
An applicant must demonstrate to the AG adequate understanding of the innovation and a
sufficient plan to test, monitor and assess the innovation while ensuring consumers are protected
from a test's failure. Upon application approval, an applicant is deemed a Sandbox participant and
given 24 months to test the innovation. A Sandbox participant must retain records, documents and
data produced in the ordinary course of business. If an innovation fails before the end of the testing
period, the Sandbox participant must notify the AG and report on actions taken to ensure
consumers have not been harmed as a result of the innovation's failure. Before the 24-month testing
period ends, a Sandbox participant must notify the AG that the Sandbox participant will exit the
Sandbox and cease offering any innovative products or services within 60 days after the 24-month
testing period ends or seek an extension in order to pursue a license or other authorization required
by law (A.R.S. §§ 41-5603; 41-5605; 41-5609; and 41-5607).
Blockchain technology is a type of distributed ledger technology that uses a distributed,
decentralized, shared and replicated ledger, which may be public or private, permissioned or
permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is
protected with cryptography, is immutable and auditable and provides an uncensored truth (A.R.S.
§ 44-7061).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
FACT SHEET – Vetoed
S.B. 1366
Page 2
Provisions
1. Redefines innovation as the use or incorporation of a new or existing idea or a new or emerging
technology or a new use of existing technology, including blockchain technology, to address a
problem, provide a benefit or otherwise offer a product, production method or service.
2. Defines blockchain technology.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Governor's Veto Message
The Governor indicates in her veto message that S.B. 1366 is too broad and would
undermine the original intentions of the Sandbox.
Senate Action House Action
FICO 2/5/24 DP 5-1-1 COM 3/12/24 DP 6-4-0-0
3
rd
Read 2/15/24 16-10-4 3rd Read 4/4/24 34-25-1
Vetoed by the Governor 4/16/24
Prepared by Senate Research
April 17, 2024
MG/AB/cs