(The Center Square) – A Louisiana House committee has advanced a bill to create a “regulatory sandbox” for companies that use blockchain technology.
Blockchain is a type of database for storing digital information, such as cryptocurrency transactions. With his House Bill 482, Rep. Mark Wright, R-Covington, hopes to attract and encourage the development of companies that use the technology, which may be more in demand as cryptocurrency continues to gain popularity.
The idea of the sandbox is to encourage development of companies in new sectors for which specific regulations don’t apply. The companies are lightly regulated at first, giving lawmakers time to create additional regulations, or not, as necessary.
Under Wright’s proposal, companies would apply to the Louisiana Office of Financial Institutions for the two-year program to test their business model.
“It’s not like we let them come in and do anything they want,” Wright said, noting the companies would pay taxes and be subject to civil and criminal liability as normal. “This is basically saying we’re open for business. We want to invite this new innovation, but here’s some basics that we’re going to require.”
Utah, Florida and Wyoming are among the states that successfully have instituted sandboxes for various industries, according to the Pelican Institute for Public Policy. Tennessee is considering a “general purpose” sandbox, the Pelican Institute said.
Though sandboxes are a relatively new concept, the United Kingdom has found companies utilizing sandboxes got to market 40% faster than other firms and were 50% more likely to get funding, said Eric Peterson, who directs Pelican’s Center for Technology and Innovation Policy.
“It shows you what sort of regulations you need, or what sort of regulations you don’t need,” Peterson said.
The House Commerce committee advanced HB 482 on Tuesday without objection.