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A09899 Summary:

BILL NOA09899A
 
SAME ASNo Same As
 
SPONSORKim (MS)
 
COSPNSRQuart, Sepulveda, D'Urso, Ra, Dickens, Pichardo, Pellegrino, Arroyo, Blake, Lavine
 
MLTSPNSRLupardo, Thiele
 
Add Art 7 701 - 712, Fin Serv L; add 9-x, Bank L
 
Relates to financial technology products and services; establishes a regulatory sandbox program.
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A09899 Actions:

BILL NOA09899A
 
02/21/2018referred to banks
04/18/2018amend (t) and recommit to banks
04/18/2018print number 9899a
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A09899 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         9899--A
 
                   IN ASSEMBLY
 
                                    February 21, 2018
                                       ___________
 
        Introduced  by  M.  of  A.  KIM,  VANEL, QUART, SEPULVEDA, D'URSO, RA --
          Multi-Sponsored by -- M. of A. LUPARDO -- read once  and  referred  to
          the  Committee on Banks -- committee discharged, bill amended, ordered
          reprinted as amended and recommitted to said committee
 
        AN ACT to amend the financial services law, in relation  to  creating  a
          regulatory  sandbox  program; to amend the banking law, in relation to
          safeguarding financial technology products and services and  prohibit-
          ing  licensing  fees for such products and services; and providing for
          the repeal of such provisions upon expiration thereof
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The financial services law is amended by adding a new arti-
     2  cle 7 to read as follows:
     3                                  ARTICLE 7
     4                         REGULATORY SANDBOX PROGRAM
     5  Section 701. Definitions.
     6          702. Reports; studies.
     7          703. Program purpose.
     8          704. Application process and requirements.
     9          705. Consultation with applicable agencies; admission authority;
    10                 scope; insurance products; investment management.
    11          706. Consumer protection.
    12          707. Exit requirements.
    13          708. Extensions.
    14          709. Auditing by third party depository or custodian services.
    15          710. Recordkeeping and reporting requirements.
    16          711. Records; disclosure; evidentiary effect.
    17          712. Reporting  requirements;  monitoring;  enforcement;  agree-
    18                 ments.
    19    § 701. Definitions. For purposes of this article, the following  terms
    20  shall have the following meanings:
    21    (a)  "Securities  investor  protection  corporation" means a federally
    22  mandated, non-profit, member-funded, United States  corporation  created
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14772-03-8

        A. 9899--A                          2
 
     1  under  the  Securities  Investor  Protection  Act  of  1970 and mandates
     2  membership of most United States registered broker-dealers.
     3    (b)  "Applicable  agency"  means  a department or agency of this state
     4  established by law to regulate certain types  of  business  activity  in
     5  this  state and persons engaged in such business, including the issuance
     6  of licenses or other types of authorization, that the  attorney  general
     7  and  state  comptroller  determines  would  otherwise regulate a sandbox
     8  participant if the person were not a regulatory sandbox participant.
     9    (c) "Consumer" means a person that purchases or otherwise enters  into
    10  a  transaction or agreement to receive a financial technology product or
    11  service that is being tested by a sandbox participant.
    12    (d) "Financial products or services" means a product or  service  that
    13  requires licensure by the applicable agency or a product or service that
    14  includes a business model, delivery mechanism or element that may other-
    15  wise  require  a  license  or  other authorization to act as a financial
    16  institution or enterprise or other  entity  that  is  regulated  by  the
    17  applicable agency.
    18    (e)  "Financial  technology  products  or  services" means a financial
    19  product or service with the use or  incorporation  of  new  or  emerging
    20  technology  or  the  reimagination  of  uses  for existing technology to
    21  address a problem, provide a  benefit  or  otherwise  offer  a  product,
    22  service,  business  model or delivery mechanism that is not known by the
    23  attorney general to have a comparable widespread offering in this state.
    24  Such term shall include, but shall not  be  limited  to,  cryptocurrency
    25  business activity.
    26    (f)  "Cryptocurrency"  means  a digital currency which uses encryption
    27  techniques to regulate the generation of currency units and  verify  the
    28  transfer of funds, operating independently from a central bank.
    29    (g) "Cryptocurrency business activity" means the conduct of any of the
    30  following types of activities involving New York or a New York resident:
    31    (1)  receiving cryptocurrency for transmission or transmitting crypto-
    32  currency, except where the transaction is undertaken  for  non-financial
    33  purposes and does not involve the transfer of more than a nominal amount
    34  of cryptocurrency;
    35    (2)  storing, holding, or maintaining custody or control of cryptocur-
    36  rency on behalf of others;
    37    (3) buying and selling cryptocurrency as a customer business;
    38    (4) performing exchange services of cryptocurrency as a customer busi-
    39  ness; or
    40    (5) controlling, administering, or issuing a cryptocurrency.
    41    (h) "Regulatory sandbox" means the program established by this article
    42  that allows a person to temporarily test financial  technology  products
    43  or  services  on  a  limited  basis  without otherwise being licensed or
    44  authorized to act under the laws of this state.
    45    (i) "Sandbox participant" means a person whose application to  partic-
    46  ipate in the regulatory sandbox is approved pursuant to this article.
    47    (j)  "Test"  means to provide activity and services as allowed by this
    48  article.
    49    § 702. Reports; studies. (a) The  attorney  general  and  state  comp-
    50  troller  shall  publish annually a written report describing the results
    51  of the regulatory sandbox established pursuant to this article  and  the
    52  results  of  their studies conducted pursuant to subdivision (b) of this
    53  section.
    54    (b) The attorney general and state comptroller shall study  long  term
    55  solutions  to  issues  that  arise from financial technology products or
    56  services, including, but not limited to:

        A. 9899--A                          3
 
     1    (1) the use of third party depository and custodian services as  audi-
     2  tors of financial technology products and services; and
     3    (2)  the  use  of  the  securities  investor protection corporation to
     4  insure all financial technology products and services  account  holder's
     5  assets.
     6    §  703.  Program  purpose.  The attorney general and state comptroller
     7  shall establish a regulatory sandbox  in  consultation  with  applicable
     8  agencies  of  this  state to enable a person to obtain limited access to
     9  the market in this state  to  test  financial  technology  products  and
    10  services  without obtaining a license or other authorization that other-
    11  wise may be required by law and without having to pay any  fees  associ-
    12  ated with such license or authorization.
    13    §  704. Application process and requirements. (a) Any person may apply
    14  to enter the regulatory sandbox to test financial technology products or
    15  services.
    16    (b) The attorney general and state comptroller shall  create  a  joint
    17  office  or coordinated process and shall accept and review each applica-
    18  tion for entry into the regulatory sandbox on a rolling basis.
    19    (c) An application shall demonstrate that the applicant both:
    20    (1) is an entity or individual that is subject to the jurisdiction  of
    21  the  attorney general and state comptroller through incorporation, resi-
    22  dency, presence, agreement, or otherwise; and
    23    (2) has established a location, whether physical or virtual,  that  is
    24  adequately accessible to the attorney general and state comptroller from
    25  which  testing  will  be  developed and performed and where all required
    26  records, documents and data will be maintained.
    27    (d) Any person, corporation, partnership or other entity that  already
    28  possesses  a  license or other authorization under state laws that regu-
    29  late financial technology products or services shall file an application
    30  with the attorney general and state comptroller to test financial  tech-
    31  nology products or services within the regulatory sandbox.
    32    (e)  Applications  shall contain sufficient information to demonstrate
    33  that an applicant has an adequate understanding of the  financial  tech-
    34  nology  product  or  service  and a sufficient plan to test, monitor and
    35  assess the  financial  technology  product  or  service  while  ensuring
    36  consumers are protected from a test's failure.
    37    (f) Applicants shall contain the information required by a form devel-
    38  oped and made publicly available by the attorney general and state comp-
    39  troller.  The  information required by the form shall include, but shall
    40  not be limited to:
    41    (1) relevant personal  and  contact  information  for  the  applicant,
    42  including   full  legal  names,  addresses,  telephone  numbers,  e-mail
    43  addresses, website addresses and any other information that the attorney
    44  general and state comptroller deems necessary;
    45    (2) disclosure of any criminal convictions of  the  applicant  or  key
    46  personnel, if any;
    47    (3)  a  description  of  the financial technology products or services
    48  desired to be tested, including statements regarding all of the  follow-
    49  ing:
    50    (A)  how a financial technology product or service is subject to regu-
    51  lation outside of the regulatory sandbox;
    52    (B) how the financial technology  product  or  service  would  benefit
    53  consumers;
    54    (C)  how the financial technology product or service is different from
    55  other products or services available in this state;

        A. 9899--A                          4
 
     1    (D) what risks will confront consumers that use or purchase the finan-
     2  cial technology product or service;
     3    (E) how entering the regulatory sandbox would enable a successful test
     4  of the financial technology product or service;
     5    (F)  a  description  of the proposed testing plan, including estimated
     6  time periods for market entry, market exit and the pursuit of  necessary
     7  licensure or authorization; and
     8    (G) how the applicant will wind down the test and protect consumers if
     9  the test fails.
    10    (g)  A  person  shall  file  a separate application for each financial
    11  technology product or service sought to be tested.
    12    (h) After the information required by subdivision (f) of this  section
    13  is  submitted, the attorney general and state comptroller may seek addi-
    14  tional information that is deemed necessary. Not later than ninety  days
    15  after  an  application  is initially submitted, the attorney general and
    16  state comptroller shall notify the applicant as to whether the applicant
    17  is approved for entry into the regulatory sandbox. The attorney  general
    18  and  state comptroller and an applicant may mutually agree to extend the
    19  time period for the attorney general and state comptroller to  determine
    20  whether  an  application is approved for entry into the regulatory sand-
    21  box.
    22    (i) The attorney general and state comptroller may deny applicants  at
    23  their  discretion  and  such  a denial shall not be an appealable agency
    24  action.
    25    § 705. Consultation with  applicable  agencies;  admission  authority;
    26  scope;  insurance  products; investment management. (a) (1) The attorney
    27  general and state comptroller shall consult  with  an  applicable  state
    28  agency  before  admitting  a  person  into  the regulatory sandbox. This
    29  consultation may include seeking information about:
    30    (A) whether the applicable agency previously has either (i)  issued  a
    31  license  or  other authorization to the applicant, or (ii) investigated,
    32  sanctioned or pursued legal action against the applicant; and
    33    (B) whether the applicant could obtain a  license  or  other  authori-
    34  zation from an applicable agency after exiting the regulatory sandbox.
    35    (2)  Notwithstanding  paragraph  one of this subdivision, the attorney
    36  general and state comptroller have the sole authority to make the  final
    37  decision of whether to admit a person into the regulatory sandbox.
    38    (b) If the attorney general and state comptroller approves an applica-
    39  tion  for  entry  into the regulatory sandbox, the applicant is deemed a
    40  sandbox participant and both of the following shall apply:
    41    (1) the sandbox participant has twenty-four months after the  date  of
    42  approval  to  test the cryptocurrency business activity described in the
    43  sandbox participant's application; and
    44    (2) the attorney general and state comptroller shall issue the sandbox
    45  participant a registration number.
    46    (c) Financial technology products or services that are provided within
    47  the regulatory sandbox are subject to the following restrictions:
    48    (1) except as provided in subdivision (d) of this  section,  not  more
    49  than ten thousand consumers may transact through or enter into an agree-
    50  ment to use the financial technology products or services;
    51    (2) except as provided in subdivision (d) of this section, for a sand-
    52  box  participant  testing  products  or services as a money transmitter,
    53  individual transactions per consumer may not exceed ten thousand dollars
    54  and aggregate transactions per  consumer  may  not  exceed  two  million
    55  dollars  over  the  course  of  the twenty-four months of the regulatory
    56  sandbox period;

        A. 9899--A                          5
 
     1    (3) for sandbox participants testing products or services as a financ-
     2  ing agency as defined in subdivision nine of section three  hundred  one
     3  of the personal property law, all of the following apply:
     4    (A) section three hundred two of the personal property law;
     5    (B) section three hundred three of the personal property law;
     6    (C) section three hundred six of the personal property law;
     7    (D) section three hundred eight of the personal property law; and
     8    (E) section 9-601 of the uniform commercial code; and
     9    (4) for sandbox participants testing products or services that provide
    10  investment management that is regulated each sandbox participant shall:
    11    (A)  make,  maintain and preserve books and records in accordance with
    12  the requirements imposed  on  federal  covered  advisers  under  17  CFR
    13  275.204-2. The sandbox participant shall file with the state comptroller
    14  and  the  attorney  general's  office  a  copy of any notices or written
    15  undertakings required to be filed by federal covered advisers  with  the
    16  securities and exchange commission under 17 CFR 275.204-2; and
    17    (B)  comply  with all requirements imposed on federal covered advisers
    18  under 17 CFR Part 275 with respect to:
    19    (i) dishonest and unethical practices;
    20    (ii) information required to be furnished to clients;
    21    (iii) custody of client funds or securities; and
    22    (iv) disclosure of financial and disciplinary information to clients.
    23    (d) If a sandbox participant demonstrates adequate financial  capital-
    24  ization,  risk  management  process  and  management  oversight they may
    25  request the attorney general and state comptroller to  allow  either  or
    26  both of the following:
    27    (1)  allow  more  than  ten  thousand consumers to transact through or
    28  enter into an agreement to  use  the  financial  technology  product  or
    29  service;
    30    (2)  for a sandbox participant testing products or services as a money
    31  transmitter, allow individual transactions per consumer  to  exceed  ten
    32  thousand  dollars  and aggregate transactions per consumer to exceed two
    33  million dollars during the twenty-four month regulatory sandbox period.
    34    (e) This section shall not restrict a sandbox participant who holds  a
    35  license  or  other  authorization  in  another  jurisdiction from acting
    36  pursuant to and in accordance with such license or other authorization.
    37    (f) A sandbox participant is deemed to possess an appropriate  license
    38  under  the laws of this state for any provision of federal law requiring
    39  state licensure or authorization.
    40    (g) Except as otherwise provided in this article,  a  sandbox  partic-
    41  ipant shall not be subject to state laws that regulate a financial prod-
    42  uct or service.
    43    (h)  The  attorney  general  and  state comptroller may determine that
    44  certain state laws that regulate financial products or services apply to
    45  a sandbox participant. If the attorney  general  and  state  comptroller
    46  make  such  determination  and approve an application for entry into the
    47  regulatory sandbox, the attorney general  and  state  comptroller  shall
    48  notify  the  sandbox  participant  of the specific state regulatory laws
    49  that will apply to the sandbox participant.
    50    (i) A sandbox participant may obtain, record, provide or  maintain  in
    51  electronic  form  any information, writing, signature, record or disclo-
    52  sure that is required by this article or may substitute any substantial-
    53  ly similar equivalent information, writing, signature, record or disclo-
    54  sure that is approved by the attorney general and state comptroller.

        A. 9899--A                          6
 
     1    § 706. Consumer protection. (a) Before providing a financial technolo-
     2  gy product or service to consumers, a sandbox participant shall disclose
     3  to consumers all of the following:
     4    (1)  the  name  and  contact  information  of  the sandbox participant
     5  including the registration number provided by the attorney  general  and
     6  state comptroller;
     7    (2)  that  the  financial  technology product or service is authorized
     8  pursuant to the regulatory sandbox and, if applicable, that the  sandbox
     9  participant  does not have a license or other authorization to generally
    10  provide products or services under state laws that regulate a  financial
    11  product or service that is outside the regulatory sandbox;
    12    (3)  that  the state does not endorse or recommend the financial tech-
    13  nology product or service;
    14    (4) that the financial technology product or service  is  a  temporary
    15  test  that may be discontinued at the end of the testing period, includ-
    16  ing the expected end date of the testing period; and
    17    (5) that consumers may contact the attorney general  and  state  comp-
    18  troller to file complaints regarding the financial technology product or
    19  service  being  tested  and provide the attorney general and state comp-
    20  troller's telephone number and website address where complaints  may  be
    21  filed.
    22    (b)  The  notifications  prescribed in subdivision (a) of this section
    23  shall be provided to consumers  in  a  clear  and  conspicuous  form  in
    24  accordance  with New York state language access requirements. For inter-
    25  net or application-based  financial  technology  products  or  services,
    26  consumers   shall  acknowledge  receipt  of  such  notifications  before
    27  completion of a transaction.
    28    (c) The attorney general and state  comptroller  may  require  that  a
    29  sandbox  participant  make additional disclosures to consumers. When the
    30  attorney general and state comptroller approve an application for  entry
    31  into  the regulatory sandbox, the attorney general and state comptroller
    32  shall notify the sandbox participant of the additional disclosures.
    33    § 707. Exit requirements. (a) At least thirty days before the  end  of
    34  the  twenty-four  month  regulatory  sandbox  testing  period  a sandbox
    35  participant must either:
    36    (1) notify the attorney general and state comptroller that the sandbox
    37  participant will exit the regulatory sandbox, wind  down  its  test  and
    38  cease  offering  any  financial  technology  products or services in the
    39  regulatory sandbox within sixty days after the twenty-four month testing
    40  period ends; or
    41    (2) seek an extension to  pursue  a  license  or  other  authorization
    42  required by law.
    43    (b)  If  the  attorney  general and state comptroller does not receive
    44  notification pursuant to subdivision (a) of this section, the regulatory
    45  sandbox testing period ends at the end of the twenty-four month  testing
    46  period  and  the  sandbox  participant  must  immediately cease offering
    47  financial technology products or services.
    48    (c) If a test  includes  offering  financial  technology  products  or
    49  services  that  require  ongoing  duties,  the sandbox participant shall
    50  continue to fulfill those  duties  or  arrange  for  another  person  to
    51  fulfill  those  duties  after the date the sandbox participant exits the
    52  regulatory sandbox.
    53    § 708. Extensions. (a) A sandbox participant may request an  extension
    54  of  the  regulatory sandbox testing period for the purpose of pursuing a
    55  license or other authorization required by law.

        A. 9899--A                          7
 
     1    (b) The attorney general and state comptroller may  grant  or  deny  a
     2  request  for an extension pursuant to subdivision (a) of this section by
     3  the end of the twenty-four month regulatory sandbox testing  period.  An
     4  extension  pursuant  to  this subdivision is not effective for more than
     5  one year after the end of the regulatory sandbox testing period.
     6    (c) A sandbox participant that obtains an extension pursuant to subdi-
     7  vision  (b)  of this section must provide the attorney general and state
     8  comptroller with a written report every three months  that  provides  an
     9  update  on efforts to obtain a license or other authorization, including
    10  any  submitted  applications  for  licensure  or  other   authorization,
    11  rejected applications or issued licenses or other authorization.
    12    §  709. Auditing by third party depository or custodian services.  All
    13  sandbox participants shall be audited by a  third  party  depository  or
    14  custodian  service.  Such  third  party  depository or custodian service
    15  shall ensure that sandbox participants:
    16    (a) have established and maintained a fund insuring a portion of their
    17  account holder's assets by the  securities  investor  protection  corpo-
    18  ration which shall replace the bond system; and
    19    (b)  provide financial technology products or services in full compli-
    20  ance with this article.
    21    § 710. Recordkeeping and reporting requirements. (a) A sandbox partic-
    22  ipant must retain records, documents and data produced in  the  ordinary
    23  course  of  business regarding a financial technology product or service
    24  tested in the regulatory sandbox.
    25    (b) If a financial technology product or service fails before the  end
    26  of  the testing period, the sandbox participant must notify the attorney
    27  general and state comptroller and report  on  actions  taken  to  ensure
    28  consumers  have  not been harmed as a result of the financial technology
    29  products or services failure.
    30    (c) A sandbox participant is subject to the  requirements  of  section
    31  two  hundred  eight  of  the  state  technology law and shall notify the
    32  attorney general and state comptroller of any "breach of the security of
    33  the system" as defined in paragraph (b) of subdivision  one  of  section
    34  two hundred eight of the state technology law.
    35    §  711.  Records; disclosure; evidentiary effect. (a) Records that are
    36  submitted to or obtained by the attorney general and  state  comptroller
    37  in  administering  this  article  are  not  public  records  or open for
    38  inspection by the public.
    39    (b) Records and information that are submitted or obtained pursuant to
    40  this article may be disclosed to any of the following:
    41    (1) state and federal agencies;
    42    (2) representatives of  foreign  countries  that  have  regulatory  or
    43  supervisory authority over the activities of the sandbox participant;
    44    (3)  a  federal,  state  or  county grand jury in response to a lawful
    45  subpoena; and
    46    (4) the state auditor general for the  purpose  of  conducting  audits
    47  authorized by law.
    48    (c)  The  attorney  general  and  state comptroller and any applicable
    49  agency consulted by the attorney general and state comptroller  are  not
    50  liable  for  the  disclosure of records, information or data received or
    51  obtained pursuant to this article.
    52    (d) The disclosure pursuant to subdivision (b) of this  section  of  a
    53  complaint  or the results of an examination, inquiry or investigation of
    54  a sandbox participant does not make that information a public record and
    55  the sandbox participant or the sandbox participant's holding company may
    56  not disclose that information to the general public unless  the  disclo-

        A. 9899--A                          8
 
     1  sure  is  required  by law. A sandbox participant or the sandbox partic-
     2  ipant's holding company may not disclose, use or reference in  any  form
     3  comments,  conclusions or results of an examination, inquiry or investi-
     4  gation in any type of communication to a customer or potential customer.
     5    (e)  This section shall not prevent the disclosure of information that
     6  is admissible as evidence in a civil or criminal proceeding brought by a
     7  state or federal law enforcement agency to enforce or prosecute civil or
     8  criminal violations of the law.
     9    § 712. Reporting requirements;  monitoring;  enforcement;  agreements.
    10  (a)  The  attorney  general and state comptroller may establish periodic
    11  reporting requirements on sandbox participants.
    12    (b) The attorney general and state comptroller may seek records, docu-
    13  ments and data from sandbox participants. On the  attorney  general  and
    14  state  comptroller's  request,  sandbox  participants  shall  make  such
    15  records, documents and data available for  inspection  by  the  attorney
    16  general and state comptroller.
    17    (c)  If  the  attorney  general  and state comptroller have reasonable
    18  cause to believe that a sandbox participant has engaged in, is  engaging
    19  in  or  is  about  to  engage  in any practice or transaction that is in
    20  violation of this article or section  three  hundred  fifty-two  of  the
    21  general  business  law,  or  that  constitutes a violation of a state or
    22  federal criminal law, the attorney general  and  state  comptroller  may
    23  remove  a  sandbox  participant  from  the regulatory sandbox or order a
    24  sandbox participant to exit the regulatory sandbox program.
    25    (d) Removal from the regulatory sandbox shall  not  be  an  appealable
    26  agency action.
    27    (e)  Sandbox participants are subject to the consumer fraud provisions
    28  under article twenty-three-A of the general business law.
    29    (f) The attorney general and state comptroller may enter  into  agree-
    30  ments  with  state,  federal  or  foreign  regulators that allow sandbox
    31  participants to  operate  in  other  jurisdictions  and  allow  entities
    32  authorized to operate in other jurisdictions to be recognized as sandbox
    33  participants in this state.
    34    § 2. The banking law is amended by adding a new section 9-x to read as
    35  follows:
    36    § 9-x. Audit of financial technology products or services; prohibiting
    37  licensing fees. 1. The following terms, when used in this section, shall
    38  have the following meanings:
    39    (a)  "Financial  technology  products  or  services" means a financial
    40  product or service with the use or  incorporation  of  new  or  emerging
    41  technology  or  the  reimagination  of  uses  for existing technology to
    42  address a problem, provide a  benefit  or  otherwise  offer  a  product,
    43  service,  business  model or delivery mechanism that is not known by the
    44  attorney general to have a comparable widespread offering in this state.
    45  Such term shall include, but shall not  be  limited  to,  cryptocurrency
    46  business activity.
    47    (b) "Cryptocurrency business activity" means the conduct of any of the
    48  following types of activities involving New York or a New York resident:
    49    (i)  receiving cryptocurrency for transmission or transmitting crypto-
    50  currency, except where the transaction is undertaken  for  non-financial
    51  purposes and does not involve the transfer of more than a nominal amount
    52  of cryptocurrency;
    53    (ii) storing, holding, or maintaining custody or control of cryptocur-
    54  rency on behalf of others;
    55    (iii) buying and selling cryptocurrency as a customer business;

        A. 9899--A                          9
 
     1    (iv)  performing  exchange  services  of  cryptocurrency as a customer
     2  business; or
     3    (v) controlling, administering, or issuing a cryptocurrency.
     4    (c)  "Cryptocurrency"  means  a digital currency which uses encryption
     5  techniques to regulate the generation of currency units and  verify  the
     6  transfer of funds, operating independently from a central bank.
     7    2.  Any person, corporation, partnership or other entity that provides
     8  financial technology products or services shall be audited by  a  public
     9  or private third party depository or custodian service. Such third party
    10  depository or custodian service shall:
    11    (a)  ensure that such person, corporation, partnership or other entity
    12  that provides financial technology products of services has  established
    13  security protocols to safeguard them from theft;
    14    (b)  ensure that such person, corporation, partnership or other entity
    15  that provides financial technology products or services has  established
    16  and  maintained  a  fund  insuring  a  portion of their account holder's
    17  assets by the securities investor  protection  corporation  which  shall
    18  replace the bond system; and
    19    (c)  regularly  examine holdings of such person, corporation, partner-
    20  ship or other entity that  provides  financial  technology  products  or
    21  services to ensure proper ownership of assets.
    22    3.  Notwithstanding  any  other  law,  rule  or regulation, no person,
    23  corporation, partnership or other entity that provides  financial  tech-
    24  nology  products or services shall be required to pay a licensing fee in
    25  order to provide such financial technology products or services.
    26    § 3. This act shall take effect on the one hundred eightieth day after
    27  it shall have become a law and shall expire and be deemed repealed  July
    28  1,  2028;  provided,  however, that effective immediately, the addition,
    29  amendment and/or repeal of any rule  or  regulation  necessary  for  the
    30  implementation  of  this  act on its effective date are authorized to be
    31  made and completed on or before such effective date.
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