Source: https://www.nysenate.gov/legislation/bills/2017/A9899
Timestamp: 2019-05-27 05:02:43
Document Index: 447223

Matched Legal Cases: ['Art 7', '§701', '§9', '§  9', '§ 701', '§ 702', '§  703', '§  704', '§ 705', 'ART 275', '§ 706', '§ 707', '§ 708', '§  709', '§ 710', '§  711', '§ 712', '§ 2', '§ 9']

NY State Assembly Bill A9899A
assembly Bill A9899A
Relates to financial technology products and services; establishes a regulatory sandbox program
Get Status Alerts for A9899A
Apr 18, 2018 print number 9899a
Apr 18, 2018 amend (t) and recommit to banks
Feb 21, 2018 referred to banks
A9899 (ACTIVE) - Details
Add Art 7 §§701 - 712, Fin Serv L; add §9-x, Bank L
A9899 (ACTIVE) - Summary
Relates to financial technology products and services; establishes a regulatory sandbox program.
A9899 (ACTIVE) - Bill Text download pdf
Introduced  by  M. of A. KIM, VANEL, QUART, SEPULVEDA -- Multi-Sponsored
by -- M. of A.  LUPARDO -- read once and referred to the Committee  on
AN  ACT  to  amend the banking law, in relation to safeguarding New York
cryptocurrency business activity and prohibiting  licensing  fees  for
such business activity
Section 1. The banking law is amended by adding a new section  9-x  to
§  9-X. AUDIT OF CRYPTOCURRENCY BUSINESS ACTIVITY; PROHIBITING LICENS-
ING FEES. 1. THE FOLLOWING TERMS, WHEN USED IN THIS SECTION, SHALL  HAVE
(A) "CRYPTOCURRENCY BUSINESS ACTIVITY" MEANS THE CONDUCT OF ANY OF THE
FOLLOWING TYPES OF ACTIVITIES INVOLVING NEW YORK OR A NEW YORK RESIDENT:
(I)  RECEIVING CRYPTOCURRENCY FOR TRANSMISSION OR TRANSMITTING CRYPTO-
CURRENCY, EXCEPT WHERE THE TRANSACTION IS UNDERTAKEN  FOR  NON-FINANCIAL
PURPOSES AND DOES NOT INVOLVE THE TRANSFER OF MORE THAN A NOMINAL AMOUNT
OF CRYPTOCURRENCY;
(II) STORING, HOLDING, OR MAINTAINING CUSTODY OR CONTROL OF CRYPTOCUR-
RENCY ON BEHALF OF OTHERS;
(III) BUYING AND SELLING CRYPTOCURRENCY AS A CUSTOMER BUSINESS;
(IV)  PERFORMING  EXCHANGE  SERVICES  OF  CRYPTOCURRENCY AS A CUSTOMER
(V) CONTROLLING, ADMINISTERING, OR ISSUING A CRYPTOCURRENCY.
(B) "CRYPTOCURRENCY" MEANS A DIGITAL CURRENCY WHICH  ENCRYPTION  TECH-
NIQUES  ARE  USED  TO  REGULATE THE GENERATION OF UNITS AND CURRENCY AND
VERIFY THE TRANSFER OF FUNDS, OPERATING  INDEPENDENTLY  FORM  A  CENTRAL
2.  ANY PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY THAT CONDUCTS
CRYPTOCURRENCY BUSINESS ACTIVITY SHALL BE AUDITED BY A PUBLIC OR PRIVATE
THIRD PARTY DEPOSITORY  SERVICE.  SUCH  THIRD-PARTY  DEPOSITORY  SERVICE
LBD14772-02-8
A. 9899                             2
(A)  ENSURE THAT SUCH PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY
THAT CONDUCTS CRYPTOCURRENCY BUSINESS ACTIVITY HAS ESTABLISHED  SECURITY
PROTOCOLS TO SAFEGUARD THEM FROM THEFT;
(B)  ENSURE THAT SUCH PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY
THAT CONDUCTS CRYPTOCURRENCY BUSINESS ACTIVITY HAS ESTABLISHED AND MAIN-
TAINED A FUND INSURING A PORTION OF THEIR ACCOUNT HOLDER'S ASSETS BY THE
SECURITIES INVESTOR PROTECTION CORPORATION,  OR  BY  ANY  OTHER  INSURER
(C)  REGULARLY  EXAMINE HOLDINGS OF SUCH PERSON, CORPORATION, PARTNER-
SHIP OR OTHER ENTITY THAT CONDUCTS CRYPTOCURRENCY BUSINESS  ACTIVITY  TO
ENSURE PROPER OWNERSHIP OF ASSETS.
3.  THE  DEPARTMENT  SHALL  ISSUE  A  DIGITAL  NEW  YORK STATE SEAL OF
APPROVAL TO ALL PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITIES  THAT
CONDUCT  CRYPTOCURRENCY  BUSINESS  ACTIVITY  THAT ARE IN FULL COMPLIANCE
WITH SUBDIVISION TWO OF THIS SECTION.
4. NOTWITHSTANDING ANY OTHER  LAW,  RULE  OR  REGULATION,  NO  PERSON,
CORPORATION,  PARTNERSHIP  OR  OTHER ENTITY THAT CONDUCTS CRYPTOCURRENCY
BUSINESS ACTIVITY SHALL BE REQUIRED TO PAY A LICENSING FEE IN  ORDER  TO
CONDUCT SUCH CRYPTOCURRENCY BUSINESS ACTIVITY.
5.  THE  SUPERINTENDENT SHALL PROMULGATE SUCH RULES AND REGULATIONS AS
MAY BE NECESSARY TO IMPLEMENT THE PROVISIONS OF THIS SECTION.
A9899A (ACTIVE) - Details
A9899A (ACTIVE) - Summary
A9899A (ACTIVE) - Bill Text download pdf
9899--A
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
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
Section 1. The financial services law is amended by adding a new arti-
cle 7 to read as follows:
SECTION 701. DEFINITIONS.
702. REPORTS; STUDIES.
703. PROGRAM PURPOSE.
704. APPLICATION PROCESS AND REQUIREMENTS.
705. CONSULTATION WITH APPLICABLE AGENCIES; ADMISSION AUTHORITY;
SCOPE; INSURANCE PRODUCTS; INVESTMENT MANAGEMENT.
706. CONSUMER PROTECTION.
707. EXIT REQUIREMENTS.
708. EXTENSIONS.
709. AUDITING BY THIRD PARTY DEPOSITORY OR CUSTODIAN SERVICES.
710. RECORDKEEPING AND REPORTING REQUIREMENTS.
711. RECORDS; DISCLOSURE; EVIDENTIARY EFFECT.
712. REPORTING  REQUIREMENTS;  MONITORING;  ENFORCEMENT;  AGREE-
§ 701. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE, THE FOLLOWING  TERMS
(A)  "SECURITIES  INVESTOR  PROTECTION  CORPORATION" MEANS A FEDERALLY
MANDATED, NON-PROFIT, MEMBER-FUNDED, UNITED STATES  CORPORATION  CREATED
LBD14772-03-8
A. 9899--A                          2
UNDER  THE  SECURITIES  INVESTOR  PROTECTION  ACT  OF  1970 AND MANDATES
MEMBERSHIP OF MOST UNITED STATES REGISTERED BROKER-DEALERS.
(B)  "APPLICABLE  AGENCY"  MEANS  A DEPARTMENT OR AGENCY OF THIS STATE
ESTABLISHED BY LAW TO REGULATE CERTAIN TYPES  OF  BUSINESS  ACTIVITY  IN
THIS  STATE AND PERSONS ENGAGED IN SUCH BUSINESS, INCLUDING THE ISSUANCE
OF LICENSES OR OTHER TYPES OF AUTHORIZATION, THAT THE  ATTORNEY  GENERAL
AND  STATE  COMPTROLLER  DETERMINES  WOULD  OTHERWISE REGULATE A SANDBOX
PARTICIPANT IF THE PERSON WERE NOT A REGULATORY SANDBOX PARTICIPANT.
(C) "CONSUMER" MEANS A PERSON THAT PURCHASES OR OTHERWISE ENTERS  INTO
A  TRANSACTION OR AGREEMENT TO RECEIVE A FINANCIAL TECHNOLOGY PRODUCT OR
SERVICE THAT IS BEING TESTED BY A SANDBOX PARTICIPANT.
(D) "FINANCIAL PRODUCTS OR SERVICES" MEANS A PRODUCT OR  SERVICE  THAT
REQUIRES LICENSURE BY THE APPLICABLE AGENCY OR A PRODUCT OR SERVICE THAT
INCLUDES A BUSINESS MODEL, DELIVERY MECHANISM OR ELEMENT THAT MAY OTHER-
WISE  REQUIRE  A  LICENSE  OR  OTHER AUTHORIZATION TO ACT AS A FINANCIAL
INSTITUTION OR ENTERPRISE OR OTHER  ENTITY  THAT  IS  REGULATED  BY  THE
APPLICABLE AGENCY.
(E)  "FINANCIAL  TECHNOLOGY  PRODUCTS  OR  SERVICES" MEANS A FINANCIAL
PRODUCT OR SERVICE WITH 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
ATTORNEY GENERAL TO HAVE A COMPARABLE WIDESPREAD OFFERING IN THIS STATE.
SUCH TERM SHALL INCLUDE, BUT SHALL NOT  BE  LIMITED  TO,  CRYPTOCURRENCY
(F)  "CRYPTOCURRENCY"  MEANS  A DIGITAL CURRENCY WHICH USES ENCRYPTION
TECHNIQUES TO REGULATE THE GENERATION OF CURRENCY UNITS AND  VERIFY  THE
TRANSFER OF FUNDS, OPERATING INDEPENDENTLY FROM A CENTRAL BANK.
(G) "CRYPTOCURRENCY BUSINESS ACTIVITY" MEANS THE CONDUCT OF ANY OF THE
(1)  RECEIVING CRYPTOCURRENCY FOR TRANSMISSION OR TRANSMITTING CRYPTO-
(2)  STORING, HOLDING, OR MAINTAINING CUSTODY OR CONTROL OF CRYPTOCUR-
(3) BUYING AND SELLING CRYPTOCURRENCY AS A CUSTOMER BUSINESS;
(4) PERFORMING EXCHANGE SERVICES OF CRYPTOCURRENCY AS A CUSTOMER BUSI-
NESS; OR
(5) CONTROLLING, ADMINISTERING, OR ISSUING A CRYPTOCURRENCY.
(H) "REGULATORY SANDBOX" MEANS THE PROGRAM ESTABLISHED BY THIS ARTICLE
THAT ALLOWS A PERSON TO TEMPORARILY TEST FINANCIAL  TECHNOLOGY  PRODUCTS
OR  SERVICES  ON  A  LIMITED  BASIS  WITHOUT OTHERWISE BEING LICENSED OR
AUTHORIZED TO ACT UNDER THE LAWS OF THIS STATE.
(I) "SANDBOX PARTICIPANT" MEANS A PERSON WHOSE APPLICATION TO  PARTIC-
IPATE IN THE REGULATORY SANDBOX IS APPROVED PURSUANT TO THIS ARTICLE.
(J)  "TEST"  MEANS TO PROVIDE ACTIVITY AND SERVICES AS ALLOWED BY THIS
§ 702. REPORTS; STUDIES. (A) THE  ATTORNEY  GENERAL  AND  STATE  COMP-
TROLLER  SHALL  PUBLISH ANNUALLY A WRITTEN REPORT DESCRIBING THE RESULTS
OF THE REGULATORY SANDBOX ESTABLISHED PURSUANT TO THIS ARTICLE  AND  THE
RESULTS  OF  THEIR STUDIES CONDUCTED PURSUANT TO SUBDIVISION (B) OF THIS
(B) THE ATTORNEY GENERAL AND STATE COMPTROLLER SHALL STUDY  LONG  TERM
SOLUTIONS  TO  ISSUES  THAT  ARISE FROM FINANCIAL TECHNOLOGY PRODUCTS OR
A. 9899--A                          3
(1) THE USE OF THIRD PARTY DEPOSITORY AND CUSTODIAN SERVICES AS  AUDI-
TORS OF FINANCIAL TECHNOLOGY PRODUCTS AND SERVICES; AND
(2)  THE  USE  OF  THE  SECURITIES  INVESTOR PROTECTION CORPORATION TO
INSURE ALL FINANCIAL TECHNOLOGY PRODUCTS AND SERVICES  ACCOUNT  HOLDER'S
§  703.  PROGRAM  PURPOSE.  THE ATTORNEY GENERAL AND STATE COMPTROLLER
SHALL ESTABLISH A REGULATORY SANDBOX  IN  CONSULTATION  WITH  APPLICABLE
AGENCIES  OF  THIS  STATE TO ENABLE A PERSON TO OBTAIN LIMITED ACCESS TO
THE MARKET IN THIS STATE  TO  TEST  FINANCIAL  TECHNOLOGY  PRODUCTS  AND
SERVICES  WITHOUT OBTAINING A LICENSE OR OTHER AUTHORIZATION THAT OTHER-
WISE MAY BE REQUIRED BY LAW AND WITHOUT HAVING TO PAY ANY  FEES  ASSOCI-
ATED WITH SUCH LICENSE OR AUTHORIZATION.
§  704. APPLICATION PROCESS AND REQUIREMENTS. (A) ANY PERSON MAY APPLY
TO ENTER THE REGULATORY SANDBOX TO TEST FINANCIAL TECHNOLOGY PRODUCTS OR
(B) THE ATTORNEY GENERAL AND STATE COMPTROLLER SHALL  CREATE  A  JOINT
OFFICE  OR COORDINATED PROCESS AND SHALL ACCEPT AND REVIEW EACH APPLICA-
TION FOR ENTRY INTO THE REGULATORY SANDBOX ON A ROLLING BASIS.
(C) AN APPLICATION SHALL DEMONSTRATE THAT THE APPLICANT BOTH:
(1) IS AN ENTITY OR INDIVIDUAL THAT IS SUBJECT TO THE JURISDICTION  OF
THE  ATTORNEY GENERAL AND STATE COMPTROLLER THROUGH INCORPORATION, RESI-
DENCY, PRESENCE, AGREEMENT, OR OTHERWISE; AND
(2) HAS ESTABLISHED A LOCATION, WHETHER PHYSICAL OR VIRTUAL,  THAT  IS
ADEQUATELY ACCESSIBLE TO THE ATTORNEY GENERAL AND STATE COMPTROLLER FROM
WHICH  TESTING  WILL  BE  DEVELOPED AND PERFORMED AND WHERE ALL REQUIRED
RECORDS, DOCUMENTS AND DATA WILL BE MAINTAINED.
(D) ANY PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY THAT  ALREADY
POSSESSES  A  LICENSE OR OTHER AUTHORIZATION UNDER STATE LAWS THAT REGU-
LATE FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES SHALL FILE AN APPLICATION
WITH THE ATTORNEY GENERAL AND STATE COMPTROLLER TO TEST FINANCIAL  TECH-
NOLOGY PRODUCTS OR SERVICES WITHIN THE REGULATORY SANDBOX.
(E)  APPLICATIONS  SHALL CONTAIN SUFFICIENT INFORMATION TO DEMONSTRATE
THAT AN APPLICANT HAS AN ADEQUATE UNDERSTANDING OF THE  FINANCIAL  TECH-
NOLOGY  PRODUCT  OR  SERVICE  AND A SUFFICIENT PLAN TO TEST, MONITOR AND
ASSESS THE  FINANCIAL  TECHNOLOGY  PRODUCT  OR  SERVICE  WHILE  ENSURING
CONSUMERS ARE PROTECTED FROM A TEST'S FAILURE.
(F) APPLICANTS SHALL CONTAIN THE INFORMATION REQUIRED BY A FORM DEVEL-
OPED AND MADE PUBLICLY AVAILABLE BY THE ATTORNEY GENERAL AND STATE COMP-
TROLLER.  THE  INFORMATION REQUIRED BY THE FORM SHALL INCLUDE, BUT SHALL
(1) RELEVANT PERSONAL  AND  CONTACT  INFORMATION  FOR  THE  APPLICANT,
INCLUDING   FULL  LEGAL  NAMES,  ADDRESSES,  TELEPHONE  NUMBERS,  E-MAIL
ADDRESSES, WEBSITE ADDRESSES AND ANY OTHER INFORMATION THAT THE ATTORNEY
GENERAL AND STATE COMPTROLLER DEEMS NECESSARY;
(2) DISCLOSURE OF ANY CRIMINAL CONVICTIONS OF  THE  APPLICANT  OR  KEY
PERSONNEL, IF ANY;
(3)  A  DESCRIPTION  OF  THE FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES
DESIRED TO BE TESTED, INCLUDING STATEMENTS REGARDING ALL OF THE  FOLLOW-
(A)  HOW A FINANCIAL TECHNOLOGY PRODUCT OR SERVICE IS SUBJECT TO REGU-
LATION OUTSIDE OF THE REGULATORY SANDBOX;
(B) HOW THE FINANCIAL TECHNOLOGY  PRODUCT  OR  SERVICE  WOULD  BENEFIT
(C)  HOW THE FINANCIAL TECHNOLOGY PRODUCT OR SERVICE IS DIFFERENT FROM
OTHER PRODUCTS OR SERVICES AVAILABLE IN THIS STATE;
A. 9899--A                          4
(D) WHAT RISKS WILL CONFRONT CONSUMERS THAT USE OR PURCHASE THE FINAN-
CIAL TECHNOLOGY PRODUCT OR SERVICE;
(E) HOW ENTERING THE REGULATORY SANDBOX WOULD ENABLE A SUCCESSFUL TEST
OF THE FINANCIAL TECHNOLOGY PRODUCT OR SERVICE;
(F)  A  DESCRIPTION  OF THE PROPOSED TESTING PLAN, INCLUDING ESTIMATED
TIME PERIODS FOR MARKET ENTRY, MARKET EXIT AND THE PURSUIT OF  NECESSARY
LICENSURE OR AUTHORIZATION; AND
(G) HOW THE APPLICANT WILL WIND DOWN THE TEST AND PROTECT CONSUMERS IF
(G)  A  PERSON  SHALL  FILE  A SEPARATE APPLICATION FOR EACH FINANCIAL
TECHNOLOGY PRODUCT OR SERVICE SOUGHT TO BE TESTED.
(H) AFTER THE INFORMATION REQUIRED BY SUBDIVISION (F) OF THIS  SECTION
IS  SUBMITTED, THE ATTORNEY GENERAL AND STATE COMPTROLLER MAY SEEK ADDI-
TIONAL INFORMATION THAT IS DEEMED NECESSARY. NOT LATER THAN NINETY  DAYS
AFTER  AN  APPLICATION  IS INITIALLY SUBMITTED, THE ATTORNEY GENERAL AND
STATE COMPTROLLER SHALL NOTIFY THE APPLICANT AS TO WHETHER THE APPLICANT
IS APPROVED FOR ENTRY INTO THE REGULATORY SANDBOX. THE ATTORNEY  GENERAL
AND  STATE COMPTROLLER AND AN APPLICANT MAY MUTUALLY AGREE TO EXTEND THE
TIME PERIOD FOR THE ATTORNEY GENERAL AND STATE COMPTROLLER TO  DETERMINE
WHETHER  AN  APPLICATION IS APPROVED FOR ENTRY INTO THE REGULATORY SAND-
(I) THE ATTORNEY GENERAL AND STATE COMPTROLLER MAY DENY APPLICANTS  AT
THEIR  DISCRETION  AND  SUCH  A DENIAL SHALL NOT BE AN APPEALABLE AGENCY
§ 705. CONSULTATION WITH  APPLICABLE  AGENCIES;  ADMISSION  AUTHORITY;
SCOPE;  INSURANCE  PRODUCTS; INVESTMENT MANAGEMENT. (A) (1) THE ATTORNEY
GENERAL AND STATE COMPTROLLER SHALL CONSULT  WITH  AN  APPLICABLE  STATE
AGENCY  BEFORE  ADMITTING  A  PERSON  INTO  THE REGULATORY SANDBOX. THIS
CONSULTATION MAY INCLUDE SEEKING INFORMATION ABOUT:
(A) WHETHER THE APPLICABLE AGENCY PREVIOUSLY HAS EITHER (I)  ISSUED  A
LICENSE  OR  OTHER AUTHORIZATION TO THE APPLICANT, OR (II) INVESTIGATED,
SANCTIONED OR PURSUED LEGAL ACTION AGAINST THE APPLICANT; AND
(B) WHETHER THE APPLICANT COULD OBTAIN A  LICENSE  OR  OTHER  AUTHORI-
ZATION FROM AN APPLICABLE AGENCY AFTER EXITING THE REGULATORY SANDBOX.
(2)  NOTWITHSTANDING  PARAGRAPH  ONE OF THIS SUBDIVISION, THE ATTORNEY
GENERAL AND STATE COMPTROLLER HAVE THE SOLE AUTHORITY TO MAKE THE  FINAL
DECISION OF WHETHER TO ADMIT A PERSON INTO THE REGULATORY SANDBOX.
(B) IF THE ATTORNEY GENERAL AND STATE COMPTROLLER APPROVES AN APPLICA-
TION  FOR  ENTRY  INTO THE REGULATORY SANDBOX, THE APPLICANT IS DEEMED A
SANDBOX PARTICIPANT AND BOTH OF THE FOLLOWING SHALL APPLY:
(1) THE SANDBOX PARTICIPANT HAS TWENTY-FOUR MONTHS AFTER THE  DATE  OF
APPROVAL  TO  TEST THE CRYPTOCURRENCY BUSINESS ACTIVITY DESCRIBED IN THE
SANDBOX PARTICIPANT'S APPLICATION; AND
(2) THE ATTORNEY GENERAL AND STATE COMPTROLLER SHALL ISSUE THE SANDBOX
PARTICIPANT A REGISTRATION NUMBER.
(C) FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES THAT ARE PROVIDED WITHIN
THE REGULATORY SANDBOX ARE SUBJECT TO THE FOLLOWING RESTRICTIONS:
(1) EXCEPT AS PROVIDED IN SUBDIVISION (D) OF THIS  SECTION,  NOT  MORE
THAN TEN THOUSAND CONSUMERS MAY TRANSACT THROUGH OR ENTER INTO AN AGREE-
MENT TO USE THE FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES;
(2) EXCEPT AS PROVIDED IN SUBDIVISION (D) OF THIS SECTION, FOR A SAND-
BOX  PARTICIPANT  TESTING  PRODUCTS  OR SERVICES AS A MONEY TRANSMITTER,
INDIVIDUAL TRANSACTIONS PER CONSUMER MAY NOT EXCEED TEN THOUSAND DOLLARS
AND AGGREGATE TRANSACTIONS PER  CONSUMER  MAY  NOT  EXCEED  TWO  MILLION
DOLLARS  OVER  THE  COURSE  OF  THE TWENTY-FOUR MONTHS OF THE REGULATORY
SANDBOX PERIOD;
A. 9899--A                          5
(3) FOR SANDBOX PARTICIPANTS TESTING PRODUCTS OR SERVICES AS A FINANC-
ING AGENCY AS DEFINED IN SUBDIVISION NINE OF SECTION THREE  HUNDRED  ONE
OF THE PERSONAL PROPERTY LAW, ALL OF THE FOLLOWING APPLY:
(A) SECTION THREE HUNDRED TWO OF THE PERSONAL PROPERTY LAW;
(B) SECTION THREE HUNDRED THREE OF THE PERSONAL PROPERTY LAW;
(C) SECTION THREE HUNDRED SIX OF THE PERSONAL PROPERTY LAW;
(D) SECTION THREE HUNDRED EIGHT OF THE PERSONAL PROPERTY LAW; AND
(E) SECTION 9-601 OF THE UNIFORM COMMERCIAL CODE; AND
(4) FOR SANDBOX PARTICIPANTS TESTING PRODUCTS OR SERVICES THAT PROVIDE
INVESTMENT MANAGEMENT THAT IS REGULATED EACH SANDBOX PARTICIPANT SHALL:
(A)  MAKE,  MAINTAIN AND PRESERVE BOOKS AND RECORDS IN ACCORDANCE WITH
THE REQUIREMENTS IMPOSED  ON  FEDERAL  COVERED  ADVISERS  UNDER  17  CFR
275.204-2. THE SANDBOX PARTICIPANT SHALL FILE WITH THE STATE COMPTROLLER
AND  THE  ATTORNEY  GENERAL'S  OFFICE  A  COPY OF ANY NOTICES OR WRITTEN
UNDERTAKINGS REQUIRED TO BE FILED BY FEDERAL COVERED ADVISERS  WITH  THE
SECURITIES AND EXCHANGE COMMISSION UNDER 17 CFR 275.204-2; AND
(B)  COMPLY  WITH ALL REQUIREMENTS IMPOSED ON FEDERAL COVERED ADVISERS
UNDER 17 CFR PART 275 WITH RESPECT TO:
(I) DISHONEST AND UNETHICAL PRACTICES;
(II) INFORMATION REQUIRED TO BE FURNISHED TO CLIENTS;
(III) CUSTODY OF CLIENT FUNDS OR SECURITIES; AND
(D) IF A SANDBOX PARTICIPANT DEMONSTRATES ADEQUATE FINANCIAL  CAPITAL-
IZATION,  RISK  MANAGEMENT  PROCESS  AND  MANAGEMENT  OVERSIGHT THEY MAY
REQUEST THE ATTORNEY GENERAL AND STATE COMPTROLLER TO  ALLOW  EITHER  OR
(1)  ALLOW  MORE  THAN  TEN  THOUSAND CONSUMERS TO TRANSACT THROUGH OR
ENTER INTO AN AGREEMENT TO  USE  THE  FINANCIAL  TECHNOLOGY  PRODUCT  OR
(2)  FOR A SANDBOX PARTICIPANT TESTING PRODUCTS OR SERVICES AS A MONEY
TRANSMITTER, ALLOW INDIVIDUAL TRANSACTIONS PER CONSUMER  TO  EXCEED  TEN
THOUSAND  DOLLARS  AND AGGREGATE TRANSACTIONS PER CONSUMER TO EXCEED TWO
MILLION DOLLARS DURING THE TWENTY-FOUR MONTH REGULATORY SANDBOX PERIOD.
(E) THIS SECTION SHALL NOT RESTRICT A SANDBOX PARTICIPANT WHO HOLDS  A
LICENSE  OR  OTHER  AUTHORIZATION  IN  ANOTHER  JURISDICTION FROM ACTING
PURSUANT TO AND IN ACCORDANCE WITH SUCH LICENSE OR OTHER AUTHORIZATION.
(F) A SANDBOX PARTICIPANT IS DEEMED TO POSSESS AN APPROPRIATE  LICENSE
UNDER  THE LAWS OF THIS STATE FOR ANY PROVISION OF FEDERAL LAW REQUIRING
STATE LICENSURE OR AUTHORIZATION.
(G) EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE,  A  SANDBOX  PARTIC-
IPANT SHALL NOT BE SUBJECT TO STATE LAWS THAT REGULATE A FINANCIAL PROD-
(H)  THE  ATTORNEY  GENERAL  AND  STATE COMPTROLLER MAY DETERMINE THAT
CERTAIN STATE LAWS THAT REGULATE FINANCIAL PRODUCTS OR SERVICES APPLY TO
A SANDBOX PARTICIPANT. IF THE ATTORNEY  GENERAL  AND  STATE  COMPTROLLER
MAKE  SUCH  DETERMINATION  AND APPROVE AN APPLICATION FOR ENTRY INTO THE
REGULATORY SANDBOX, THE ATTORNEY GENERAL  AND  STATE  COMPTROLLER  SHALL
NOTIFY  THE  SANDBOX  PARTICIPANT  OF THE SPECIFIC STATE REGULATORY LAWS
THAT WILL APPLY TO THE SANDBOX PARTICIPANT.
(I) A SANDBOX PARTICIPANT MAY OBTAIN, RECORD, PROVIDE OR  MAINTAIN  IN
ELECTRONIC  FORM  ANY INFORMATION, WRITING, SIGNATURE, RECORD OR DISCLO-
SURE THAT IS REQUIRED BY THIS ARTICLE OR MAY SUBSTITUTE ANY SUBSTANTIAL-
LY SIMILAR EQUIVALENT INFORMATION, WRITING, SIGNATURE, RECORD OR DISCLO-
SURE THAT IS APPROVED BY THE ATTORNEY GENERAL AND STATE COMPTROLLER.
A. 9899--A                          6
§ 706. CONSUMER PROTECTION. (A) BEFORE PROVIDING A FINANCIAL TECHNOLO-
GY PRODUCT OR SERVICE TO CONSUMERS, A SANDBOX PARTICIPANT SHALL DISCLOSE
TO CONSUMERS ALL OF THE FOLLOWING:
(1)  THE  NAME  AND  CONTACT  INFORMATION  OF  THE SANDBOX PARTICIPANT
INCLUDING THE REGISTRATION NUMBER PROVIDED BY THE ATTORNEY  GENERAL  AND
(2)  THAT  THE  FINANCIAL  TECHNOLOGY PRODUCT OR SERVICE IS AUTHORIZED
PURSUANT TO THE REGULATORY SANDBOX AND, IF APPLICABLE, THAT THE  SANDBOX
PARTICIPANT  DOES NOT HAVE A LICENSE OR OTHER AUTHORIZATION TO GENERALLY
PROVIDE PRODUCTS OR SERVICES UNDER STATE LAWS THAT REGULATE A  FINANCIAL
PRODUCT OR SERVICE THAT IS OUTSIDE THE REGULATORY SANDBOX;
(3)  THAT  THE STATE DOES NOT ENDORSE OR RECOMMEND THE FINANCIAL TECH-
NOLOGY PRODUCT OR SERVICE;
(4) THAT THE FINANCIAL TECHNOLOGY PRODUCT OR SERVICE  IS  A  TEMPORARY
TEST  THAT MAY BE DISCONTINUED AT THE END OF THE TESTING PERIOD, INCLUD-
ING THE EXPECTED END DATE OF THE TESTING PERIOD; AND
(5) THAT CONSUMERS MAY CONTACT THE ATTORNEY GENERAL  AND  STATE  COMP-
TROLLER TO FILE COMPLAINTS REGARDING THE FINANCIAL TECHNOLOGY PRODUCT OR
SERVICE  BEING  TESTED  AND PROVIDE THE ATTORNEY GENERAL AND STATE COMP-
TROLLER'S TELEPHONE NUMBER AND WEBSITE ADDRESS WHERE COMPLAINTS  MAY  BE
(B)  THE  NOTIFICATIONS  PRESCRIBED IN SUBDIVISION (A) OF THIS SECTION
SHALL BE PROVIDED TO CONSUMERS  IN  A  CLEAR  AND  CONSPICUOUS  FORM  IN
ACCORDANCE  WITH NEW YORK STATE LANGUAGE ACCESS REQUIREMENTS. FOR INTER-
NET OR APPLICATION-BASED  FINANCIAL  TECHNOLOGY  PRODUCTS  OR  SERVICES,
CONSUMERS   SHALL  ACKNOWLEDGE  RECEIPT  OF  SUCH  NOTIFICATIONS  BEFORE
COMPLETION OF A TRANSACTION.
(C) THE ATTORNEY GENERAL AND STATE  COMPTROLLER  MAY  REQUIRE  THAT  A
SANDBOX  PARTICIPANT  MAKE ADDITIONAL DISCLOSURES TO CONSUMERS. WHEN THE
ATTORNEY GENERAL AND STATE COMPTROLLER APPROVE AN APPLICATION FOR  ENTRY
INTO  THE REGULATORY SANDBOX, THE ATTORNEY GENERAL AND STATE COMPTROLLER
SHALL NOTIFY THE SANDBOX PARTICIPANT OF THE ADDITIONAL DISCLOSURES.
§ 707. EXIT REQUIREMENTS. (A) AT LEAST THIRTY DAYS BEFORE THE  END  OF
THE  TWENTY-FOUR  MONTH  REGULATORY  SANDBOX  TESTING  PERIOD  A SANDBOX
PARTICIPANT MUST EITHER:
(1) NOTIFY THE ATTORNEY GENERAL AND STATE COMPTROLLER THAT THE SANDBOX
PARTICIPANT WILL EXIT THE REGULATORY SANDBOX, WIND  DOWN  ITS  TEST  AND
CEASE  OFFERING  ANY  FINANCIAL  TECHNOLOGY  PRODUCTS OR SERVICES IN THE
REGULATORY SANDBOX WITHIN SIXTY DAYS AFTER THE TWENTY-FOUR MONTH TESTING
PERIOD ENDS; OR
(2) SEEK AN EXTENSION TO  PURSUE  A  LICENSE  OR  OTHER  AUTHORIZATION
(B)  IF  THE  ATTORNEY  GENERAL AND STATE COMPTROLLER DOES NOT RECEIVE
NOTIFICATION PURSUANT TO SUBDIVISION (A) OF THIS SECTION, THE REGULATORY
SANDBOX TESTING PERIOD ENDS AT THE END OF THE TWENTY-FOUR MONTH  TESTING
PERIOD  AND  THE  SANDBOX  PARTICIPANT  MUST  IMMEDIATELY CEASE OFFERING
FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES.
(C) IF A TEST  INCLUDES  OFFERING  FINANCIAL  TECHNOLOGY  PRODUCTS  OR
SERVICES  THAT  REQUIRE  ONGOING  DUTIES,  THE SANDBOX PARTICIPANT SHALL
CONTINUE TO FULFILL THOSE  DUTIES  OR  ARRANGE  FOR  ANOTHER  PERSON  TO
FULFILL  THOSE  DUTIES  AFTER THE DATE THE SANDBOX PARTICIPANT EXITS THE
REGULATORY SANDBOX.
§ 708. EXTENSIONS. (A) A SANDBOX PARTICIPANT MAY REQUEST AN  EXTENSION
OF  THE  REGULATORY SANDBOX TESTING PERIOD FOR THE PURPOSE OF PURSUING A
LICENSE OR OTHER AUTHORIZATION REQUIRED BY LAW.
A. 9899--A                          7
(B) THE ATTORNEY GENERAL AND STATE COMPTROLLER MAY  GRANT  OR  DENY  A
REQUEST  FOR AN EXTENSION PURSUANT TO SUBDIVISION (A) OF THIS SECTION BY
THE END OF THE TWENTY-FOUR MONTH REGULATORY SANDBOX TESTING  PERIOD.  AN
EXTENSION  PURSUANT  TO  THIS SUBDIVISION IS NOT EFFECTIVE FOR MORE THAN
ONE YEAR AFTER THE END OF THE REGULATORY SANDBOX TESTING PERIOD.
(C) A SANDBOX PARTICIPANT THAT OBTAINS AN EXTENSION PURSUANT TO SUBDI-
VISION  (B)  OF THIS SECTION MUST PROVIDE THE ATTORNEY GENERAL AND STATE
COMPTROLLER WITH A WRITTEN REPORT EVERY THREE MONTHS  THAT  PROVIDES  AN
UPDATE  ON EFFORTS TO OBTAIN A LICENSE OR OTHER AUTHORIZATION, INCLUDING
ANY  SUBMITTED  APPLICATIONS  FOR  LICENSURE  OR  OTHER   AUTHORIZATION,
REJECTED APPLICATIONS OR ISSUED LICENSES OR OTHER AUTHORIZATION.
§  709. AUDITING BY THIRD PARTY DEPOSITORY OR CUSTODIAN SERVICES.  ALL
SANDBOX PARTICIPANTS SHALL BE AUDITED BY A  THIRD  PARTY  DEPOSITORY  OR
CUSTODIAN  SERVICE.  SUCH  THIRD  PARTY  DEPOSITORY OR CUSTODIAN SERVICE
SHALL ENSURE THAT SANDBOX PARTICIPANTS:
(A) HAVE ESTABLISHED AND MAINTAINED A FUND INSURING A PORTION OF THEIR
ACCOUNT HOLDER'S ASSETS BY THE  SECURITIES  INVESTOR  PROTECTION  CORPO-
RATION WHICH SHALL REPLACE THE BOND SYSTEM; AND
(B)  PROVIDE FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES IN FULL COMPLI-
ANCE WITH THIS ARTICLE.
§ 710. RECORDKEEPING AND REPORTING REQUIREMENTS. (A) A SANDBOX PARTIC-
IPANT MUST RETAIN RECORDS, DOCUMENTS AND DATA PRODUCED IN  THE  ORDINARY
COURSE  OF  BUSINESS REGARDING A FINANCIAL TECHNOLOGY PRODUCT OR SERVICE
TESTED IN THE REGULATORY SANDBOX.
(B) IF A FINANCIAL TECHNOLOGY PRODUCT OR SERVICE FAILS BEFORE THE  END
OF  THE TESTING PERIOD, THE SANDBOX PARTICIPANT MUST NOTIFY THE ATTORNEY
GENERAL AND STATE COMPTROLLER AND REPORT  ON  ACTIONS  TAKEN  TO  ENSURE
CONSUMERS  HAVE  NOT BEEN HARMED AS A RESULT OF THE FINANCIAL TECHNOLOGY
PRODUCTS OR SERVICES FAILURE.
(C) A SANDBOX PARTICIPANT IS SUBJECT TO THE  REQUIREMENTS  OF  SECTION
TWO  HUNDRED  EIGHT  OF  THE  STATE  TECHNOLOGY LAW AND SHALL NOTIFY THE
ATTORNEY GENERAL AND STATE COMPTROLLER OF ANY "BREACH OF THE SECURITY OF
THE SYSTEM" AS DEFINED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF  SECTION
TWO HUNDRED EIGHT OF THE STATE TECHNOLOGY LAW.
§  711.  RECORDS; DISCLOSURE; EVIDENTIARY EFFECT. (A) RECORDS THAT ARE
SUBMITTED TO OR OBTAINED BY THE ATTORNEY GENERAL AND  STATE  COMPTROLLER
IN  ADMINISTERING  THIS  ARTICLE  ARE  NOT  PUBLIC  RECORDS  OR OPEN FOR
INSPECTION BY THE PUBLIC.
(B) RECORDS AND INFORMATION THAT ARE SUBMITTED OR OBTAINED PURSUANT TO
THIS ARTICLE MAY BE DISCLOSED TO ANY OF THE FOLLOWING:
(1) STATE AND FEDERAL AGENCIES;
(2) REPRESENTATIVES OF  FOREIGN  COUNTRIES  THAT  HAVE  REGULATORY  OR
SUPERVISORY AUTHORITY OVER THE ACTIVITIES OF THE SANDBOX PARTICIPANT;
(3)  A  FEDERAL,  STATE  OR  COUNTY GRAND JURY IN RESPONSE TO A LAWFUL
SUBPOENA; AND
(4) THE STATE AUDITOR GENERAL FOR THE  PURPOSE  OF  CONDUCTING  AUDITS
(C)  THE  ATTORNEY  GENERAL  AND  STATE COMPTROLLER AND ANY APPLICABLE
AGENCY CONSULTED BY THE ATTORNEY GENERAL AND STATE COMPTROLLER  ARE  NOT
LIABLE  FOR  THE  DISCLOSURE OF RECORDS, INFORMATION OR DATA RECEIVED OR
OBTAINED PURSUANT TO THIS ARTICLE.
(D) THE DISCLOSURE PURSUANT TO SUBDIVISION (B) OF THIS  SECTION  OF  A
COMPLAINT  OR THE RESULTS OF AN EXAMINATION, INQUIRY OR INVESTIGATION OF
A SANDBOX PARTICIPANT DOES NOT MAKE THAT INFORMATION A PUBLIC RECORD AND
THE SANDBOX PARTICIPANT OR THE SANDBOX PARTICIPANT'S HOLDING COMPANY MAY
NOT DISCLOSE THAT INFORMATION TO THE GENERAL PUBLIC UNLESS  THE  DISCLO-
A. 9899--A                          8
SURE  IS  REQUIRED  BY LAW. A SANDBOX PARTICIPANT OR THE SANDBOX PARTIC-
IPANT'S HOLDING COMPANY MAY NOT DISCLOSE, USE OR REFERENCE IN  ANY  FORM
COMMENTS,  CONCLUSIONS OR RESULTS OF AN EXAMINATION, INQUIRY OR INVESTI-
GATION IN ANY TYPE OF COMMUNICATION TO A CUSTOMER OR POTENTIAL CUSTOMER.
(E)  THIS SECTION SHALL NOT PREVENT THE DISCLOSURE OF INFORMATION THAT
IS ADMISSIBLE AS EVIDENCE IN A CIVIL OR CRIMINAL PROCEEDING BROUGHT BY A
STATE OR FEDERAL LAW ENFORCEMENT AGENCY TO ENFORCE OR PROSECUTE CIVIL OR
CRIMINAL VIOLATIONS OF THE LAW.
§ 712. REPORTING REQUIREMENTS;  MONITORING;  ENFORCEMENT;  AGREEMENTS.
(A)  THE  ATTORNEY  GENERAL AND STATE COMPTROLLER MAY ESTABLISH PERIODIC
REPORTING REQUIREMENTS ON SANDBOX PARTICIPANTS.
(B) THE ATTORNEY GENERAL AND STATE COMPTROLLER MAY SEEK RECORDS, DOCU-
MENTS AND DATA FROM SANDBOX PARTICIPANTS. ON THE  ATTORNEY  GENERAL  AND
STATE  COMPTROLLER'S  REQUEST,  SANDBOX  PARTICIPANTS  SHALL  MAKE  SUCH
RECORDS, DOCUMENTS AND DATA AVAILABLE FOR  INSPECTION  BY  THE  ATTORNEY
GENERAL AND STATE COMPTROLLER.
(C)  IF  THE  ATTORNEY  GENERAL  AND STATE COMPTROLLER HAVE REASONABLE
CAUSE TO BELIEVE THAT A SANDBOX PARTICIPANT HAS ENGAGED IN, IS  ENGAGING
IN  OR  IS  ABOUT  TO  ENGAGE  IN ANY PRACTICE OR TRANSACTION THAT IS IN
VIOLATION OF THIS ARTICLE OR SECTION  THREE  HUNDRED  FIFTY-TWO  OF  THE
GENERAL  BUSINESS  LAW,  OR  THAT  CONSTITUTES A VIOLATION OF A STATE OR
FEDERAL CRIMINAL LAW, THE ATTORNEY GENERAL  AND  STATE  COMPTROLLER  MAY
REMOVE  A  SANDBOX  PARTICIPANT  FROM  THE REGULATORY SANDBOX OR ORDER A
SANDBOX PARTICIPANT TO EXIT THE REGULATORY SANDBOX PROGRAM.
(D) REMOVAL FROM THE REGULATORY SANDBOX SHALL  NOT  BE  AN  APPEALABLE
(E)  SANDBOX PARTICIPANTS ARE SUBJECT TO THE CONSUMER FRAUD PROVISIONS
UNDER ARTICLE TWENTY-THREE-A OF THE GENERAL BUSINESS LAW.
(F) THE ATTORNEY GENERAL AND STATE COMPTROLLER MAY ENTER  INTO  AGREE-
MENTS  WITH  STATE,  FEDERAL  OR  FOREIGN  REGULATORS THAT ALLOW SANDBOX
PARTICIPANTS TO  OPERATE  IN  OTHER  JURISDICTIONS  AND  ALLOW  ENTITIES
AUTHORIZED TO OPERATE IN OTHER JURISDICTIONS TO BE RECOGNIZED AS SANDBOX
PARTICIPANTS IN THIS STATE.
§ 2. The banking law is amended by adding a new section 9-x to read as
§ 9-X. AUDIT OF FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES; PROHIBITING
LICENSING FEES. 1. THE FOLLOWING TERMS, WHEN USED IN THIS SECTION, SHALL
(A)  "FINANCIAL  TECHNOLOGY  PRODUCTS  OR  SERVICES" MEANS A FINANCIAL
(B) "CRYPTOCURRENCY BUSINESS ACTIVITY" MEANS THE CONDUCT OF ANY OF THE
A. 9899--A                          9
(C)  "CRYPTOCURRENCY"  MEANS  A DIGITAL CURRENCY WHICH USES ENCRYPTION
2.  ANY PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY THAT PROVIDES
FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES SHALL BE AUDITED BY  A  PUBLIC
OR PRIVATE THIRD PARTY DEPOSITORY OR CUSTODIAN SERVICE. SUCH THIRD PARTY
DEPOSITORY OR CUSTODIAN SERVICE SHALL:
THAT PROVIDES FINANCIAL TECHNOLOGY PRODUCTS OF SERVICES HAS  ESTABLISHED
SECURITY PROTOCOLS TO SAFEGUARD THEM FROM THEFT;
THAT PROVIDES FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES HAS  ESTABLISHED
AND  MAINTAINED  A  FUND  INSURING  A  PORTION OF THEIR ACCOUNT HOLDER'S
ASSETS BY THE SECURITIES INVESTOR  PROTECTION  CORPORATION  WHICH  SHALL
REPLACE THE BOND SYSTEM; AND
SHIP OR OTHER ENTITY THAT  PROVIDES  FINANCIAL  TECHNOLOGY  PRODUCTS  OR
SERVICES TO ENSURE PROPER OWNERSHIP OF ASSETS.
3.  NOTWITHSTANDING  ANY  OTHER  LAW,  RULE  OR REGULATION, NO PERSON,
CORPORATION, PARTNERSHIP OR OTHER ENTITY THAT PROVIDES  FINANCIAL  TECH-
NOLOGY  PRODUCTS OR SERVICES SHALL BE REQUIRED TO PAY A LICENSING FEE IN
ORDER TO PROVIDE SUCH FINANCIAL TECHNOLOGY PRODUCTS OR SERVICES.
it shall have become a law and shall expire and be deemed repealed  July
1,  2028;  provided,  however, that effective immediately, the addition,
implementation  of  this  act on its effective date are authorized to be