Connecticut 2022 Regular Session

Connecticut Senate Bill SB00482 Compare Versions

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Version 2 (New)

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7		-	General Assembly Substitute Bill No. 482
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8	9		February Session, 2022
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	13	+	Referred to Committee on FINANCE, REVENUE AND
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	17	+	Introduced by:
	18	+	(FIN)
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12	23		AN ACT ESTABLISHING THE FINTECH REGULATORY SANDBOX
13	24		PROGRAM AND THE INSURTECH REGULATORY SANDBOX
14	25		INITIATIVE.
15	26		Be it enacted by the Senate and House of Representatives in General
16	27		Assembly convened:
17	28
18	29		Section 1. (NEW) (Effective July 1, 2022) (a) For the purposes of this 1
19	30		section: 2
20	31		(1) "Applicable agency" means a department or agency of the state 3
21	32		that may regulate the type of financial product or service in the state that 4
22	33		comprises an innovative product or service and individuals or 5
23	34		companies that provide such financial product or service; 6
24	35		(2) "Blockchain technology" means an electronic method for storing 7
25	36		data in a decentralized system that (A) uses cryptography to secure such 8
26	37		data, (B) is consensus-based, (C) is mathematically verified, and (D) is 9
27	38		distributed across multiple locations; 10
28	39		(3) "Company" means a corporation or other organized entity with a 11
29		-	physical location in the state; 12
	40	+	physical location in the state; 12 Raised Bill No. 482
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30	46		(4) "Consumer" means an individual or a company that purchases or 13
31	47		otherwise enters into a transaction or agreement to receive a financial 14
32	48		product or service; 15
33		-	(5) "Cryptocurrency" means a digital currency in which transactions 16 Substitute Bill No. 482
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	49	+	(5) "Cryptocurrency" means a digital currency in which transactions 16
40	50		are verified and records are maintained through blockchain technology; 17
41	51		(6) "Financial product or service" means (A) a financial product or 18
42	52		service that requires licensure or registration under the provisions of the 19
43	53		general statutes, or (B) a financial product or service that includes a 20
44	54		business model, a delivery mechanism or an element that may require 21
45	55		licensure or registration to act as a financial institution, an enterprise or 22
46	56		other entity that is regulated under the provisions of title 36a of the 23
47	57		general statutes or other related provisions. "Financial product or 24
48	58		service" does not include a product or service that is regulated under the 25
49	59		provisions of title 38a of the general statutes or chapter 672a of the 26
50	60		general statutes; 27
51	61		(7) "Innovation" means the use or incorporation of a new or emerging 28
52	62		technology or a new use of existing technology, including, but not 29
53	63		limited to, blockchain technology, to address a problem, provide a 30
54	64		benefit or offer a product, service, business model or delivery 31
55	65		mechanism, where such product, service, model or mechanism is not 32
56	66		known by the applicable agency to have a widespread offering in the 33
57	67		state; and 34
58	68		(8) "Innovative product or service" means a financial product or 35
59	69		service that includes an innovation. 36
60	70		(b) (1) (A) There is established a Fintech Regulatory Sandbox 37
61	71		program to allow companies to make an innovative product or service, 38
62	72		including products or services related to cryptocurrency, available to 39
63	73		consumers temporarily without such companies obtaining a license or 40
64	74		other authorization that may otherwise be required. The program shall 41
65	75		be overseen by the Innovation Council established under subsection (j) 42
66		-	of this section. 43
	76	+	of this section. 43 Raised Bill No. 482
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67	82		(B) (i) Notwithstanding any provision of the general statutes, any 44
68	83		company that is approved to participate in the program (I) shall be 45
69	84		granted a waiver by the applicable agency of any license or other 46
70		-	authorization required under the general statutes or regulations 47 Substitute Bill No. 482
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	85	+	authorization required under the general statutes or regulations 47
77	86		adopted thereafter, unless the applicable agency determines that waiver 48
78	87		of such licensure or other authorization should not be waived and 49
79	88		provides its reasons substantiating such determination to the 50
80	89		Innovation Council, and (II) may be granted a waiver by the applicable 51
81	90		agency of specified requirements imposed by the general statutes or 52
82	91		regulations adopted thereunder that do not currently permit the 53
83	92		innovative product or service to be made available to consumers in the 54
84	93		state. 55
85	94		(ii) Any waiver granted pursuant to subparagraph (B)(i)(II) of this 56
86	95		subdivision shall (I) be no more extensive than what is necessary, as 57
87	96		determined by the applicable agency, to accomplish the purposes of this 58
88	97		section, and (II) be valid for the duration of the program period set forth 59
89	98		in subdivision (2) of this subsection and, if applicable, for the period 60
90	99		extended pursuant to subdivision (2) of subsection (d) of this section. 61
91	100		(iii) Each applicable agency shall provide a list to the Innovation 62
92	101		Council of the waivers granted by such agency to each such company. 63
93	102		(2) (A) Any company may apply to the Innovation Council to 64
94	103		participate in the Fintech Regulatory Sandbox program for a thirty-six-65
95	104		month period. A company that is licensed or otherwise authorized in 66
96	105		another jurisdiction shall be eligible to apply, provided such company 67
97	106		has a physical location in the state. The council shall prescribe the form 68
98	107		and manner of the application and the amount of the application fee to 69
99	108		be submitted with each application. An applicant shall submit a 70
100	109		separate application for each innovative product or service for which 71
101	110		the applicant is seeking participation in the program. 72
102	111		(B) Each application shall include, but not be limited to, (i) contact 73
103	112		information of the applicant, including the legal name, address, 74
104		-	telephone number, electronic mail address and Internet web site 75
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105	119		address, (ii) disclosure of any criminal convictions of the applicant or 76
106	120		any employee of the applicant who is substantially involved in the 77
107	121		development, operation or management of the innovative product or 78
108		-	service, (iii) the information to be considered by the Innovation Council 79 Substitute Bill No. 482
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	122	+	service, (iii) the information to be considered by the Innovation Council 79
115	123		under subdivision (3) of this subsection, and (iv) any other information 80
116	124		reasonably necessary for the council to determine an applicant's 81
117	125		eligibility for the program. The council shall forward a copy of each 82
118	126		application to the applicable agency for such agency's review and 83
119	127		recommendation. 84
120	128		(3) The Innovation Council shall consider, for each application 85
121	129		submitted: 86
122	130		(A) The nature of the innovative product or service proposed to be 87
123	131		made available to consumers, including any potential risks to 88
124	132		consumers; 89
125	133		(B) The methods the applicant will use to protect consumers and 90
126	134		resolve complaints during the program period; 91
127	135		(C) A business plan submitted by the applicant and the availability of 92
128	136		capital; 93
129	137		(D) Whether the applicant's management has the necessary expertise 94
130	138		to conduct a pilot of the innovative product or service during the 95
131	139		program period; 96
132	140		(E) Whether any officer or director of the applicant who is 97
133	141		substantially involved in the development, operation or management of 98
134	142		the innovative product or service has been convicted of or is currently 99
135	143		under investigation for fraud or a violation of state or federal securities 100
136	144		law; 101
137	145		(F) Whether the applicable agency has investigated, sanctioned or 102
138	146		pursued legal action against the applicant; and 103
139	147		(G) Any other factor the council or applicable agency deems 104
140		-	necessary to determine whether the applicant or the innovative product 105
141		-	or service furthers the goals of the program. 106
142		-	(4) The Innovation Council may deny an application for any reason 107 Substitute Bill No. 482
	148	+	necessary to determine whether the applicant or the innovative product 105 Raised Bill No. 482
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	154	+	or service furthers the goals of the program. 106
	155	+	(4) The Innovation Council may deny an application for any reason 107
149	156		and shall provide specific reasons for the denial to the applicant. Any 108
150	157		such applicant may reapply to participate in the Fintech Regulatory 109
151	158		Sandbox program, provided the applicant has taken action to address 110
152	159		the reasons provided for the denial. Any application approved by the 111
153	160		council shall not be against the public interest and shall not 112
154	161		unreasonably increase the risk to consumers. 113
155	162		(5) The Innovation Council may impose a participation fee on each 114
156	163		applicant approved for the Fintech Regulatory Sandbox program and 115
157	164		may impose additional fees based on factors such as the size of a 116
158	165		company or the number of consumers a company may have, provided 117
159	166		any fees imposed under this subdivision shall not be unreasonably high 118
160	167		or discourage participation. The council shall determine all applicable 119
161	168		fees and shall post such fees on each applicable agency's Internet web 120
162	169		site. 121
163	170		(c) (1) As a condition of participation in the Fintech Regulatory 122
164	171		Sandbox program, an applicant shall agree to submit any employee who 123
165	172		is substantially involved in the development, operation or management 124
166	173		of the innovative product or service to a criminal history records check. 125
167	174		Upon approval of an applicant's application, the company shall have a 126
168		-	period of ~~thirty-six~~ months after the date of approval to make the 127
	175	+	period of twenty-four months after the date of approval to make the 127
169	176		innovative product or service available to consumers, subject to the 128
170	177		following conditions: (A) The applicable agency may specify, on a case-129
171	178		by-case basis, a maximum number of consumers permitted to receive 130
172	179		the innovative product or service, a maximum value amount for a single 131
173	180		transaction to a consumer or a maximum aggregate value of 132
174	181		transactions to a consumer; and (B) the applicable agency may require 133
175	182		the company to execute a surety bond or to deposit cash or marketable 134
176	183		securities with such agency, in an amount determined by such agency, 135
177	184		as security for potential losses suffered by consumers. Such surety bond, 136
178	185		cash or marketable securities shall be cancelled or refunded, as 137
179		-	applicable, when any waiver granted to the company under this section 138
180		-	has expired or when the applicable agency determines that any 139
181		-	consumer claims have been satisfied, whichever is later. 140 Substitute Bill No. 482
	186	+	applicable, when any waiver granted to the company under this section 138 Raised Bill No. 482
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	192	+	has expired or when the applicable agency determines that any 139
	193	+	consumer claims have been satisfied, whichever is later. 140
188	194		(2) Each applicable agency shall establish reporting requirements for 141
189	195		program participants, including information about consumer 142
190	196		complaints, if any. 143
191	197		(3) The Innovation Council shall post on each applicable agency's 144
192	198		Internet web site a list of companies that have been approved to 145
193	199		participate in the program, the innovative product or service offered by 146
194	200		each such company and any waiver granted to such company. 147
195	201		(d) (1) Prior to providing an innovative product or service to a 148
196	202		consumer, the program participant shall disclose the following to the 149
197	203		consumer in a clear and conspicuous format in English and Spanish: (A) 150
198	204		The name and contact information of the participant; (B) that the 151
199	205		innovative product or service is authorized pursuant to the provisions 152
200	206		of this section for a temporary period; (C) that neither the state nor the 153
201	207		applicable agency endorses or recommends the innovative product or 154
202		-	service and that neither is subject to any liability for losses or damages 155
	208	+	service and that neither are subject to any liability for losses or damages 155
203	209		caused by such product or service; (D) that the consumer may contact 156
204	210		the applicable agency to file a complaint regarding the innovative 157
205	211		product or service and the contact information for the appropriate 158
206	212		applicable agency; and (E) any other statements or additional 159
207	213		disclosures that may be required by the applicable agency. 160
208	214		(2) Any program participant may request an extension of the 161
209	215		program period set forth in subparagraph (A) of subdivision (2) of 162
210	216		subsection (b) of this section for an innovative product or service. Any 163
211	217		such extension shall require the agreement of both the Innovation 164
212	218		Council and the applicable agency that such extension furthers the 165
213	219		purposes of this section and there are no unreasonable risks posed to 166
214	220		consumers by extending the program period for such product or service. 167
215	221		(e) (1) The Innovation Council or the applicable agency may collect 168
216	222		personal information that is relevant and necessary to accomplish the 169
217		-	purposes of this section, provided such personal information may not 170
218		-	be disclosed further without the written consent of the subject of the 171
219		-	information. Any documents, materials or other information in the 172 Substitute Bill No. 482
	223	+	purposes of this section, provided such personal information may not 170 Raised Bill No. 482
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	229	+	be disclosed further without the written consent of the subject of the 171
	230	+	information. Any documents, materials or other information in the 172
226	231		possession or control of the council or the applicable agency that are 173
227	232		obtained by, created by or disclosed to the council, the applicable agency 174
228	233		or any other person, in the course of review and approval of an 175
229	234		innovative product or service under this section shall be confidential by 176
230	235		law and privileged, shall not be subject to disclosure under section 1-210 177
231	236		of the general statutes, shall not be subject to subpoena and shall not be 178
232	237		subject to discovery or admissible in evidence in any civil action in the 179
233	238		state. 180
234	239		(2) The Innovation Council or the applicable agency may enter into 181
235	240		agreements with regulators in other jurisdictions to advance the 182
236	241		purposes of the Fintech Regulatory Sandbox program, which 183
237	242		agreements may include permission for any program participant to 184
238	243		operate in other jurisdictions. 185
239	244		(3) (A) The Innovation Council, in consultation with the applicable 186
240	245		agency, may terminate a participant's participation in the program at 187
241	246		any time and for any reason, provided the council shall provide not less 188
242	247		than ten days' notice of such termination to the participant. Any 189
243	248		participant whose participation has been terminated pursuant to this 190
244	249		subparagraph shall be afforded notice and hearing in accordance with 191
245	250		the provisions of chapter 54 of the general statutes, except that any 192
246	251		decision of the council after such hearing shall not be appealable under 193
247	252		section 4-183 of the general statutes. 194
248	253		(B) Any program participant may submit a written request to the 195
249	254		council and the applicable agency to exit the program at any time, 196
250	255		provided the participant has resolved any consumer complaints and has 197
251	256		notified the applicable agency that consumers have not been harmed as 198
252	257		a result of the innovative product or service. 199
253	258		(f) (1) At the end of the program period or any extension thereof, each 200
254	259		participant shall submit a report, in a form and manner prescribed by 201
255		-	the applicable agency, to the Innovation Council and the applicable 202
256		-	agency. Such report shall include a description of the innovative 203
257		-	product or service, the number of consumers to which such product or 204 Substitute Bill No. 482
	260	+	the applicable agency, to the Innovation Council and the applicable 202 Raised Bill No. 482
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	266	+	agency. Such report shall include a description of the innovative 203
	267	+	product or service, the number of consumers to which such product or 204
264	268		service was provided and any other information required by the 205
265	269		applicable agency. 206
266		-	(2) If a program participant is unable to obtain a license or other 207
267		-	authorization for the innovative product or service from the applicable 208
268		-	agency within ninety days after the date of expiration of the program 209
269		-	period or any extension thereof, the participant shall wind down its 210
270		-	operations with its existing consumers, except that the participant may, 211
271		-	with respect to such product or service, (A) collect and receive money 212
272		-	owed by a consumer based on any agreement made before the 213
273		-	expiration of the program period or any extension thereof, (B) take any 214
274		-	necessary legal action, and (C) take such other action that is authorized 215
275		-	by the applicable agency. If a program participant has ongoing duties 216
276		-	after the expiration of the ninety-day period, the participant shall 217
277		-	continue to fulfill only those duties or arrange for another company to 218
278		-	fulfill such duties after such expiration date. 219
279		-	(3) A contract entered into by a program participant and another 220
280		-	party during the program period or any extension thereof, if applicable, 221
281		-	shall be governed by its terms and shall not expire or terminate solely 222
282		-	on the basis of the expiration or termination of the program participant's 223
283		-	participation in the program, unless such provision was included in 224
284		-	such contract. A self-executing contract that is entered into and stored 225
285		-	through blockchain technology is a valid and enforceable contract for 226
286		-	the purposes of this subdivision. 227
287		-	(4) Each program participant shall retain, for not less than three years 228
288		-	after the expiration of the program period or any extension thereof, all 229
289		-	records, documents and data produced in the ordinary course of 230
290		-	business regarding the innovative product or service for which 231
291		-	participation in the program was approved, and shall make such 232
292		-	records, documents and data available to the applicable agency upon 233
293		-	written request. 234
294		-	(g) Each applicable agency shall adopt regulations, in accordance 235
295		-	with the provisions of chapter 54 of the general statutes, to establish an 236 Substitute Bill No. 482
	270	+	(2) If a program participant cannot obtain approval of the innovative 207
	271	+	product or service from the applicable agency within ninety days after 208
	272	+	the date of expiration of the program period, the participant shall wind 209
	273	+	down its operations with its existing consumers, except that the 210
	274	+	participant may, with respect to such product or service, (A) collect and 211
	275	+	receive money owed by a consumer based on any agreement made 212
	276	+	before the expiration of the program period or any extension thereof, (B) 213
	277	+	take any necessary legal action, and (C) take such other action that is 214
	278	+	authorized by the applicable agency. If a program participant has 215
	279	+	ongoing duties after the expiration of the ninety-day period, the 216
	280	+	participant shall continue to fulfill only those duties or arrange for 217
	281	+	another company to fulfill such duties after such expiration date. 218
	282	+	(3) A contract entered into by a program participant and another 219
	283	+	party during the program period or any extension thereof, if applicable, 220
	284	+	shall be governed by its terms and shall not expire or terminate solely 221
	285	+	on the basis of the expiration or termination of the program participant's 222
	286	+	participation in the program, unless such provision was included in 223
	287	+	such contract. A self-executing contract that is entered into and stored 224
	288	+	through blockchain technology is a valid and enforceable contract for 225
	289	+	the purposes of this subdivision. 226
	290	+	(4) Each program participant shall retain, for not less than three years 227
	291	+	after the expiration of the program period or any extension thereof, all 228
	292	+	records, documents and data produced in the ordinary course of 229
	293	+	business regarding the innovative product or service for which 230
	294	+	participation in the program was approved, and shall make such 231
	295	+	records, documents and data available to the applicable agency upon 232
	296	+	written request. 233
	297	+	(g) Each applicable agency shall adopt regulations, in accordance 234 Raised Bill No. 482
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302		-	expedited process for program participants to receive a license or other 237
303		-	authorization after the completion of the program period or any 238
304		-	extension thereof, provided such program participants have resolved 239
305		-	any consumer complaints and are otherwise in good standing with the 240
306		-	Innovation Council and the applicable agency. 241
307		-	(h) (1) A program participant shall be deemed to possess an 242
308		-	appropriate license or other authorization under the laws of the state for 243
309		-	purposes of any provision of federal law that requires state licensure or 244
310		-	authorization. 245
311		-	(2) Notwithstanding any provision of this section, no program 246
312		-	participant shall be immune from liability for any criminal offense 247
313		-	committed during the participant's participation in the program. 248
314		-	(i) The Innovation Council may designate nonprofit organizations as 249
315		-	partners to assist Fintech Regulatory Sandbox program applicants with 250
316		-	the application process and program participants with the design or 251
317		-	implementation of innovative products or services during the program 252
318		-	period or any extension thereof. Such organizations may explore, 253
319		-	receive input on, analyze and make recommendations to the Innovation 254
320		-	Council and program applicants and participants, with respect to 255
321		-	innovations and applications of innovative technology that would 256
322		-	provide benefits to the state, the state's consumers and the state's 257
323		-	industries. Any nonprofit organization may apply to the council, in such 258
324		-	form and manner prescribed by the council, for approval to serve as a 259
325		-	partner. 260
326		-	(j) (1) There is established an Innovation Council to support 261
327		-	innovation, investment and job creation within the state by encouraging 262
328		-	and promoting participation in the Fintech Regulatory Sandbox 263
329		-	program. The Innovation Council shall be within the Department of 264
330		-	Banking for administrative purposes only and shall consist of the 265
331		-	following members: 266
332		-	(A) The Banking Commissioner, or the commissioner's designee; 267 Substitute Bill No. 482
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	303	+	with the provisions of chapter 54 of the general statutes, to establish an 235
	304	+	expedited process for program participants to receive a license or other 236
	305	+	authorization after the completion of the program period or any 237
	306	+	extension thereof, provided such program participants have resolved 238
	307	+	any consumer complaints and are otherwise in good standing with the 239
	308	+	Innovation Council and the applicable agency. 240
	309	+	(h) (1) A program participant shall be deemed to possess an 241
	310	+	appropriate license or other authorization under the laws of the state for 242
	311	+	purposes of any provision of federal law that requires state licensure or 243
	312	+	authorization. 244
	313	+	(2) Notwithstanding any provision of this section, no program 245
	314	+	participant shall be immune from liability for any criminal offense 246
	315	+	committed during the participant's participation in the program. 247
	316	+	(i) The Innovation Council may designate nonprofit organizations as 248
	317	+	partners to assist Fintech Regulatory Sandbox program applicants with 249
	318	+	the application process and program participants with the design or 250
	319	+	implementation of innovative products or services during the program 251
	320	+	period or any extension thereof. Such organizations may explore, 252
	321	+	receive input on, analyze and make recommendations to the Innovation 253
	322	+	Council and program applicants and participants, with respect to 254
	323	+	innovations and applications of innovative technology that would 255
	324	+	provide benefits to the state, the state's consumers and the state's 256
	325	+	industries. Any nonprofit organization may apply to the council, in such 257
	326	+	form and manner prescribed by the council, for approval to serve as a 258
	327	+	partner. 259
	328	+	(j) (1) There is established an Innovation Council to support 260
	329	+	innovation, investment and job creation within the state by encouraging 261
	330	+	and promoting participation in the Fintech Regulatory Sandbox 262
	331	+	program. The Innovation Council shall be within the Department of 263
	332	+	Banking for administrative purposes only and shall consist of the 264
	333	+	following members: 265
	334	+	(A) The Banking Commissioner, or the commissioner's designee; 266 Raised Bill No. 482
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339		-	(B) The Commissioner of Economic and Community Development, 268
340		-	or the commissioner's designee; 269
341		-	(C) The Attorney General, or the Attorney General's designee; 270
342		-	(D) One member of the public appointed by the speaker of the House 271
343		-	of Representatives and one member of the public appointed by the 272
344		-	president pro tempore of the Senate, each of whom has entrepreneurial 273
345		-	expertise or expertise in financial products or services, blockchain 274
346		-	technology or cryptocurrency; 275
347		-	(E) One member of the public appointed by the majority leader of the 276
348		-	House of Representatives and one member of the public appointed by 277
349		-	the majority leader of the Senate, each of whom is a member of 278
350		-	academia; 279
351		-	(F) One member of the public appointed by the minority leader of the 280
352		-	House of Representatives and one member of the public appointed by 281
353		-	the minority leader of the Senate, each of whom has a background in 282
354		-	entrepreneurship expertise or expertise in financial products or services, 283
355		-	blockchain technology or cryptocurrency; and 284
356		-	(G) Two members of the public appointed by the Governor, each of 285
357		-	whom has a background in entrepreneurship expertise or expertise in 286
358		-	financial products or services, blockchain technology or cryptocurrency. 287
359		-	(2) All initial appointments to the Innovation Council shall be made 288
360		-	not later than September 1, 2022, and shall terminate on August 31, 2024, 289
361		-	or August 31, 2026, as applicable, regardless of when the initial 290
362		-	appointment was made. 291
363		-	(3) Members first appointed shall have the following terms: (A) One 292
364		-	member appointed by the Governor, one member appointed by the 293
365		-	speaker of the House of Representatives and one member appointed by 294
366		-	the president pro tempore of the Senate shall initially serve a term of 295
367		-	two years; and (B) the remaining appointed members shall initially 296
368		-	serve a term of four years. Appointed members shall serve a term of four 297 Substitute Bill No. 482
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	340	+	(B) The Commissioner of Economic and Community Development, 267
	341	+	or the commissioner's designee; 268
	342	+	(C) The Attorney General, or the Attorney General's designee; 269
	343	+	(D) One member of the public appointed by the speaker of the House 270
	344	+	of Representatives and one member of the public appointed by the 271
	345	+	president pro tempore of the Senate, each of whom has entrepreneurial 272
	346	+	expertise or expertise in financial products or services, blockchain 273
	347	+	technology or cryptocurrency; 274
	348	+	(E) One member of the public appointed by the majority leader of the 275
	349	+	House of Representatives and one member of the public appointed by 276
	350	+	the majority leader of the Senate, each of whom is a member of 277
	351	+	academia; 278
	352	+	(F) One member of the public appointed by the minority leader of the 279
	353	+	House of Representatives and one member of the public appointed by 280
	354	+	the minority leader of the Senate, each of whom has a background in 281
	355	+	entrepreneurship expertise or expertise in financial products or services, 282
	356	+	blockchain technology or cryptocurrency; and 283
	357	+	(G) Two members of the public appointed by the Governor, each of 284
	358	+	whom has a background in entrepreneurship expertise or expertise in 285
	359	+	financial products or services, blockchain technology or cryptocurrency. 286
	360	+	(2) All initial appointments to the Innovation Council shall be made 287
	361	+	not later than September 1, 2022, and shall terminate on August 31, 2024, 288
	362	+	or August 31, 2026, as applicable, regardless of when the initial 289
	363	+	appointment was made. 290
	364	+	(3) Members first appointed shall have the following terms: (A) One 291
	365	+	member appointed by the Governor, one member appointed by the 292
	366	+	speaker of the House of Representatives and one member appointed by 293
	367	+	the president pro tempore of the Senate shall initially serve a term of 294
	368	+	two years; and (B) the remaining appointed members shall initially 295
	369	+	serve a term of four years. Appointed members shall serve a term of four 296 Raised Bill No. 482
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375		-	years thereafter and may be reappointed but shall not serve more than 298
376		-	two consecutive terms. Any vacancy shall be filled by the appointing 299
377		-	authority. Any vacancy occurring other than by expiration of term shall 300
378		-	be filled for the balance of the unexpired term. 301
379		-	(4) Notwithstanding any provision of the general statutes, it shall not 302
380		-	constitute a conflict of interest for a trustee, director, partner, officer, 303
381		-	stockholder, proprietor, counsel or employee of any company, or any 304
382		-	individual having a financial interest in a company, to serve as a 305
383		-	member of the Innovation Council, provided all appointed members of 306
384		-	the Innovation Council shall be deemed public officials and shall adhere 307
385		-	to the code of ethics for public officials set forth in chapter 10 of the 308
386		-	general statutes, except that no appointed member shall be required to 309
387		-	file a statement of financial interest as described in section 1-83 of the 310
388		-	general statutes. 311
389		-	(5) The Governor shall appoint the chairperson of the Innovation 312
390		-	Council from among the members set forth in subparagraphs (A) to (C), 313
391		-	inclusive, of subdivision (1) of this subsection. The chairperson shall 314
392		-	schedule the first meeting of the Innovation Council, which shall be held 315
393		-	not later than October 1, 2022. At such meeting, the Innovation Council 316
394		-	shall elect a vice-chairperson from among the appointed members. 317
395		-	(6) A majority of the Innovation Council shall constitute a quorum for 318
396		-	the transaction of any business. 319
397		-	(7) The appointed members of the Innovation Council shall serve 320
398		-	without compensation, but shall, within the limits of available funds, be 321
399		-	reimbursed for expenses necessarily incurred in the performance of 322
400		-	their duties. 323
401		-	(8) The Department of Banking shall provide administrative support 324
402		-	to the Innovation Council. 325
403		-	(k) (1) The Innovation Council shall have the following powers and 326
404		-	duties: 327 Substitute Bill No. 482
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	375	+	years thereafter and may be reappointed but shall not serve more than 297
	376	+	two consecutive terms. Any vacancy shall be filled by the appointing 298
	377	+	authority. Any vacancy occurring other than by expiration of term shall 299
	378	+	be filled for the balance of the unexpired term. 300
	379	+	(4) Notwithstanding any provision of the general statutes, it shall not 301
	380	+	constitute a conflict of interest for a trustee, director, partner, officer, 302
	381	+	stockholder, proprietor, counsel or employee of any company, or any 303
	382	+	individual having a financial interest in a company, to serve as a 304
	383	+	member of the Innovation Council, provided all appointed members of 305
	384	+	the Innovation Council shall be deemed public officials and shall adhere 306
	385	+	to the code of ethics for public officials set forth in chapter 10 of the 307
	386	+	general statutes, except that no appointed member shall be required to 308
	387	+	file a statement of financial interest as described in section 1-83 of the 309
	388	+	general statutes. 310
	389	+	(5) The Governor shall appoint the chairperson of the Innovation 311
	390	+	Council from among the members set forth in subparagraphs (A) to (C), 312
	391	+	inclusive, of subdivision (1) of this subsection. The chairperson shall 313
	392	+	schedule the first meeting of the Innovation Council, which shall be held 314
	393	+	not later than October 1, 2022. At such meeting, the Innovation Council 315
	394	+	shall elect a vice-chairperson from among the appointed members. 316
	395	+	(6) A majority of the Innovation Council shall constitute a quorum for 317
	396	+	the transaction of any business. 318
	397	+	(7) The appointed members of the Innovation Council shall serve 319
	398	+	without compensation, but shall, within the limits of available funds, be 320
	399	+	reimbursed for expenses necessarily incurred in the performance of 321
	400	+	their duties. 322
	401	+	(8) The Department of Banking shall provide administrative support 323
	402	+	to the Innovation Council. 324
	403	+	(k) (1) The Innovation Council shall have the following powers and 325
	404	+	duties: 326 Raised Bill No. 482
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411		-	(A) Set standards, principles, guidelines and policy priorities for the 328
412		-	types of innovations the Fintech Regulatory Sandbox program will 329
413		-	support; 330
414		-	(B) Help publicize and encourage participation in the Fintech 331
415		-	Regulatory Sandbox program; 332
416		-	(C) Obtain from any executive department, board, commission or 333
417		-	other agency of the state such assistance and data as necessary and 334
418		-	available to carry out the purposes of this section; 335
419		-	(D) Verify applicant eligibility for the program with applicable 336
420		-	agencies, review applications for participation in the program and work 337
421		-	collaboratively with applicable agencies to oversee the program and its 338
422		-	participants; 339
423		-	(E) Explore, receive input on, analyze and make recommendations 340
424		-	with respect to blockchain technology and cryptocurrency initiatives 341
425		-	and applications of blockchain technology that would provide benefits 342
426		-	to the state, the state's consumers and the state's industries; 343
427		-	(F) Limit, to the extent practicable, the amount of risk exposure from 344
428		-	the products and services offered under the program and establish 345
429		-	safeguards to protect consumers; and 346
430		-	(G) Perform such other acts as may be necessary and appropriate to 347
431		-	carry out the duties described in this section. 348
432		-	(2) The Innovation Council may establish bylaws to govern its 349
433		-	procedures. 350
434		-	(l) Not later than January 1, 2024, and annually thereafter, the 351
435		-	Innovation Council shall submit a report, in accordance with the 352
436		-	provisions of section 11-4a of the general statutes, to the Governor and 353
437		-	the joint standing committees of the General Assembly having 354
438		-	cognizance of matters relating to banks, commerce and finance, revenue 355
439		-	and bonding on the Fintech Regulatory Sandbox program, which shall 356 Substitute Bill No. 482
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	409	+
	410	+	(A) Set standards, principles, guidelines and policy priorities for the 327
	411	+	types of innovations the Fintech Regulatory Sandbox program will 328
	412	+	support; 329
	413	+	(B) Help publicize and encourage participation in the Fintech 330
	414	+	Regulatory Sandbox program; 331
	415	+	(C) Obtain from any executive department, board, commission or 332
	416	+	other agency of the state such assistance and data as necessary and 333
	417	+	available to carry out the purposes of this section; 334
	418	+	(D) Verify applicant eligibility for the program with applicable 335
	419	+	agencies, review applications for participation in the program and work 336
	420	+	collaboratively with applicable agencies to oversee the program and its 337
	421	+	participants; 338
	422	+	(E) Explore, receive input on, analyze and make recommendations 339
	423	+	with respect to blockchain technology and cryptocurrency initiatives 340
	424	+	and applications of blockchain technology that would provide benefits 341
	425	+	to the state, the state's consumers and the state's industries; 342
	426	+	(F) Limit, to the extent practicable, the amount of risk exposure from 343
	427	+	the products and services offered under the program and establish 344
	428	+	safeguards to protect consumers; and 345
	429	+	(G) Perform such other acts as may be necessary and appropriate to 346
	430	+	carry out the duties described in this section. 347
	431	+	(2) The Innovation Council may establish bylaws to govern its 348
	432	+	procedures. 349
	433	+	(l) Not later than January 1, 2024, and annually thereafter, the 350
	434	+	Innovation Council shall submit a report, in accordance with the 351
	435	+	provisions of section 11-4a of the general statutes, to the Governor and 352
	436	+	the joint standing committees of the General Assembly having 353
	437	+	cognizance of matters relating to banks, commerce and finance, revenue 354
	438	+	and bonding on the Fintech Regulatory Sandbox program, which shall 355
	439	+	include, but need not be limited to, (1) the number of applicants to the 356 Raised Bill No. 482
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446		-	include, but need not be limited to, (1) the number of applicants to the 357
447		-	program in the preceding calendar year, (2) the number of program 358
448		-	participants in the preceding calendar year, (3) a description of each 359
449		-	innovative product or service made available to consumers through the 360
450		-	program, and (4) any recommendations for policy or legislative changes 361
451		-	to improve or expand the program or to administer the program more 362
452		-	efficiently. 363
453		-	Sec. 2. (NEW) (Effective July 1, 2022) (a) Notwithstanding any 364
454		-	provision of the general statutes, the Insurance Commissioner, in 365
455		-	consultation with the CTNext board of directors, shall establish an 366
456		-	Insurtech Regulatory Sandbox initiative to facilitate the development of 367
457		-	new technologies and types of insurance for start-up insurance 368
458		-	companies that do not have the capital or labor resources to comply with 369
459		-	the insurance requirements of the state. Such initiative shall begin to be 370
460		-	implemented not later than January 1, 2023. Such initiative shall: 371
461		-	(1) Establish conditions for participating in the initiative and provide 372
462		-	for an application process for new companies to be accepted into the 373
463		-	initiative. The commissioner shall accept all applicants that meet such 374
464		-	conditions, except that the commissioner may limit in the first two years 375
465		-	of the initiative the number of companies allowed to participate in the 376
466		-	initiative; 377
467		-	(2) Provide that the commissioner shall waive the requirement to be 378
468		-	licensed in the state for participating companies; 379
469		-	(3) Establish a light regulatory framework of only the requirements 380
470		-	the commissioner deems crucial to impose on participating companies 381
471		-	to protect consumers; 382
472		-	(4) Designate an employee or employees to exclusively oversee and 383
473		-	manage the administration of the initiative; 384
474		-	(5) Permit consumers in the state to purchase products offered by 385
475		-	participating companies while ensuring that such consumers are aware 386
476		-	that such products are offered under reduced regulatory oversight; 387 Substitute Bill No. 482
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	444	+
	445	+	program in the preceding calendar year, (2) the number of program 357
	446	+	participants in the preceding calendar year, (3) a description of each 358
	447	+	innovative product or service made available to consumers through the 359
	448	+	program, and (4) any recommendations for policy or legislative changes 360
	449	+	to improve or expand the program or to administer the program more 361
	450	+	efficiently. 362
	451	+	Sec. 2. (NEW) (Effective July 1, 2022) (a) Notwithstanding any 363
	452	+	provision of the general statutes, the Insurance Commissioner, in 364
	453	+	consultation with the CTNext board of directors, shall establish an 365
	454	+	Insurtech Regulatory Sandbox initiative to facilitate the development of 366
	455	+	new technologies and types of insurance for start-up insurance 367
	456	+	companies that do not have the capital or labor resources to comply with 368
	457	+	the insurance requirements of the state. Such initiative shall begin to be 369
	458	+	implemented not later than January 1, 2023. Such initiative shall: 370
	459	+	(1) Establish conditions for participating in the initiative and provide 371
	460	+	for an application process for new companies to be accepted into the 372
	461	+	initiative. The commissioner shall accept all applicants that meet such 373
	462	+	conditions, except that the commissioner may limit in the first two years 374
	463	+	of the initiative the number of companies allowed to participate in the 375
	464	+	initiative; 376
	465	+	(2) Provide that the commissioner shall waive the requirement to be 377
	466	+	licensed in the state for participating companies; 378
	467	+	(3) Establish a light regulatory framework of only the requirements 379
	468	+	the commissioner deems crucial to impose on participating companies 380
	469	+	to protect consumers; 381
	470	+	(4) Designate an employee or employees to exclusively oversee and 382
	471	+	manage the administration of the initiative; 383
	472	+	(5) Permit consumers in the state to purchase products offered by 384
	473	+	participating companies while ensuring that such consumers are aware 385
	474	+	that such products are offered under reduced regulatory oversight; 386 Raised Bill No. 482
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483		-	(6) Establish the maximum number of policyholders or named 388
484		-	insured or customers and the maximum amount of risk exposure each 389
485		-	participating company may have. The commissioner may specify the 390
486		-	demographics that each such company may serve, so as to protect 391
487		-	consumers who are least able to make informed choices about insurance 392
488		-	products and understand the relevant risks of a product offered by such 393
489		-	company; 394
490		-	(7) Ensure the initiative is structured to match the pace of product 395
491		-	offerings and the growth of participating companies, including allowing 396
492		-	for more rapid product testing and product adjustments on a weekly or 397
493		-	more frequent basis; 398
494		-	(8) Allow participating companies to remain in the initiative for an 399
495		-	initial period of thirty-six months. The commissioner may establish 400
496		-	conditions to allow for an extension of such period; 401
497		-	(9) Establish clear steps participating companies shall meet to 402
498		-	demonstrate such company's product or service is viable and can be 403
499		-	made available to the wider market; and 404
500		-	(10) Establish reporting requirements for participating companies. 405
501		-	(b) The commissioner may remove a participating company from the 406
502		-	Insurtech Regulatory Sandbox initiative at any time if the commissioner 407
503		-	determines there is an unreasonable risk to policyholders or customers 408
504		-	of such company. 409
505		-	(c) Not later than January 1, 2024, and annually thereafter, the 410
506		-	commissioner shall submit a report, in accordance with the provisions 411
507		-	of section 11-4a of the general statutes, to the joint standing committees 412
508		-	of the General Assembly having cognizance of matters relating to 413
509		-	insurance, commerce and finance, revenue and bonding, summarizing 414
510		-	the number of participating companies in the Insurtech Regulatory 415
511		-	Sandbox initiative, any products or services such companies offer, any 416
512		-	products or services that have been deemed to be viable or offered to 417
513		-	the wider market, any participating companies that have established 418 Substitute Bill No. 482
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	479	+
	480	+	(6) Establish the maximum number of policyholders or named 387
	481	+	insured or customers and the maximum amount of risk exposure each 388
	482	+	participating company may have. The commissioner may specify the 389
	483	+	demographics that each such company may serve, so as to protect 390
	484	+	consumers who are least able to make informed choices about insurance 391
	485	+	products and understand the relevant risks of a product offered by such 392
	486	+	company; 393
	487	+	(7) Ensure the initiative is structured to match the pace of product 394
	488	+	offerings and the growth of participating companies, including allowing 395
	489	+	for more rapid product testing and product adjustments on a weekly or 396
	490	+	more frequent basis; 397
	491	+	(8) Allow participating companies to remain in the initiative for an 398
	492	+	initial period of thirty-six months. The commissioner may establish 399
	493	+	conditions to allow for an extension of such period; 400
	494	+	(9) Establish clear steps participating companies shall meet to 401
	495	+	demonstrate such company's product or service is viable and can be 402
	496	+	made available to the wider market; and 403
	497	+	(10) Establish reporting requirements for participating companies. 404
	498	+	(b) The commissioner may remove a participating company from the 405
	499	+	Insurtech Regulatory Sandbox initiative at any time if the commissioner 406
	500	+	determines there is an unreasonable risk to policyholders or customers 407
	501	+	of such company. 408
	502	+	(c) Not later than January 1, 2024, and annually thereafter, the 409
	503	+	commissioner shall submit a report, in accordance with the provisions 410
	504	+	of section 11-4a of the general statutes, to the joint standing committees 411
	505	+	of the General Assembly having cognizance of matters relating to 412
	506	+	insurance, commerce and finance, revenue and bonding, summarizing 413
	507	+	the number of participating companies in the Insurtech Regulatory 414
	508	+	Sandbox initiative, any products or services such companies offer, any 415
	509	+	products or services that have been deemed to be viable or offered to 416
	510	+	the wider market, any participating companies that have established 417 Raised Bill No. 482
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520		-	themselves in the state and become licensed insurance companies, and 419
521		-	any other information the commissioner deems relevant. 420
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	515	+
	516	+	themselves in the state and become licensed insurance companies, and 418
	517	+	any other information the commissioner deems relevant. 419
522	518		This act shall take effect as follows and shall amend the following
523	519		sections:
524	520
525	521		Section 1 July 1, 2022 New section
526	522		Sec. 2 July 1, 2022 New section
527	523
528		-	Statement of ~~Legislative Commissioners~~:
529		-	~~In Section 1(c)(1), "twenty-four months" was changed~~ to ~~"thirty-six~~
530		-	~~months" for consistency,~~ and ~~in Section 1(f)(2), the first sentence was~~
531		-	~~rewritten for consistency~~.
532		-
533		-	~~FIN Joint Favorable Subst. -LCO~~
	524	+	Statement of Purpose:
	525	+	To establish a regulatory sandbox program and initiative for innovative
	526	+	financial and insurance products and services.
	527	+	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
	528	+	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
	529	+	underlined.]
534	530