Research Note: Utah’s Regulatory Sandbox

Research Note: Utah’s Regulatory Sandbox

Editor’s Note: As the 5th of 7 planned research notes by our summer intern, Stephen Trainer, this post discusses the concept of regulatory sandboxes. The Platte Institute has supported several regulatory sandbox efforts, including a comprehensive one (which would cover multiple industries) and the most recent one (LB587 in 2023/24), which provides for an “insuretech sandbox.” LB587 was amended into LB92 in 2023. 


A relatively new phenomenon, regulatory sandboxes offer a promising solution to burdensome regulatory climates nationwide. Inaugurated in the United Kingdom in 2016, these sandboxes provide “a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question,” as articulated by the UK’s Financial Conduct Authority, the entity credited with conceiving the concept. The initiative aimed to foster innovation, particularly within fintech startups.

Following the model, around 10 states have introduced similar legislation aimed at fintech, insurance, medical devices, and even legal services. In 2019, Utah ventured into uncharted territory within the legal realm by enacting its inaugural regulatory sandbox, diverging from the conventional fintech sphere. The objective was clear: “to provide a space for lawyers and other professionals to deliver nontraditional legal services under the supervision of the state supreme court.” Within nine months, this initiative facilitated legal assistance for 2,500 individuals, addressing a spectrum of concerns spanning healthcare to housing. Collaborations between lawyers and diverse professionals yielded innovative legal frameworks leveraging technologies like smart contracts. Preceding Utah, Arizona pioneered legislation establishing the nation’s premier fintech sandbox, akin to the UK model. Participants enjoy a reprieve from standard regulations for an initial two-year period, extendable by an additional year. However, a pivotal disparity distinguishes these examples: Arizona prioritizes pioneering innovation and bestows broad waivers, and Utah caters to specific needs under conditional waivers.

Nebraska could benefit from a similar system that allows for experimentation under supervision, which would yield better data for lawmakers and agencies to craft laws and regulations, respectively. Nebraska’s agricultural, meat processing, savings and loans, or natural gas industries could all benefit from innovation.


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