Alston & Bird Consumer Finance Blog


Arizona Seeks to Improve FinTech Sandbox with HB 2177

A&B ABstract: Arizona launched a first-in-the-nation FinTech Sandbox in August 2018, which has been a successful venture by the state. Arizona seeks to improve this program with the enactment of HB 2177 and the Arizona Attorney General Office’s involvement in the CFPB’s American Consumer Financial Innovation Network.

Arizona’s FinTech Sandbox

In August 2018, Arizona was the first state to launch its “FinTech Sandbox” to ease state regulatory burdens for persons offering innovative financial technologies. (The July 2019 Alston & Bird LLP Structured Finance Spectrum provides further details).  This program allows such persons to register with the Attorney General’s Office and conduct limited tests of their technologies under its supervision without otherwise complying with more burdensome licensing and regulatory requirements. Arizona Attorney General Mark Brnovich has touted the success of this program, stating that it is “the most active and successful regulatory sandbox in North America.”

House Bill 2177

To improve this program, Arizona enacted HB 2177, which:

  • Makes businesses that provide a “substantial component of a financial product or service” eligible to participate, which will (i) allow for tests of products that affect how financial services are provided in the marketplace even if the product itself is not regulated and (ii) enable regulatory technology (“RegTech”) products to now seek entry into the program as stand-alone participants;
  • Requires applicants to demonstrate the cybersecurity measures they will undertake as part of a sandbox test to ensure consumer data remains private and protected; and
  • No longer requires that sandbox tests involving payments involve the participation of Arizona residents, as long as the transaction occurs in Arizona.

In a recent announcement regarding HB 2177, Attorney General Brnovich also announced his office’s participation in the American Consumer Financial Innovation Network (“ACFIN”).  ACFIN is a new CFPB initiative that seeks to bring together state and federal financial services regulators to collaborate on innovation-fostering programs like the FinTech Sandbox.  Given his office’s experience administering the program, Brnvich is encouraged by the federal efforts evident in ACFIN.


In addition to Arizona, Alabama, Georgia, Indiana, South Carolina, Tennessee and Utah are members of ACFIN. We are keeping our eyes on ACFIN, as we believe this to be an important initiative, and look forward to what is to come.