Author: Victoria Avramović
In today’s rapidly evolving financial and insurance landscape, innovation often moves faster than regulation. North Carolina recognized this gap and decided to do something about it.
The North Carolina Regulatory Sandbox Program was established to bridge the divide between innovators and regulators, creating a structured environment where new ideas can be safely tested while maintaining the highest standards of consumer protection. But how did it come to be? The story of the Sandbox is one of collaboration, foresight, and a shared commitment to building a future-ready economy.
Laying the Foundation: The Vision for Innovation
The concept of a “regulatory sandbox” first gained traction globally as a way for governments to support responsible innovation in sectors like fintech and Insurtech. Early models in the United Kingdom, Singapore, and Arizona showed that sandbox programs could help emerging technologies thrive under regulatory supervision fostering progress without compromising safety.
In North Carolina, policymakers saw similar potential. With a thriving financial services sector, second only to New York in banking assets and a growing ecosystem of startups, the State was uniquely positioned to take the lead in modernizing regulation for innovation.
State leaders, regulators, and private-sector partners began exploring how a sandbox could work within North Carolina’s existing legal and regulatory framework. The goal was clear: create a pathway that enables new products to reach the market faster, while ensuring North Carolinians remain protected.
Legislative Action: Establishing the Framework
In 2021, the North Carolina General Assembly passed House Bill 624, known as the North Carolina Regulatory Sandbox Act. This landmark legislation formally established the North Carolina Innovation Council and the Regulatory Sandbox Program.
The law created a collaborative structure where innovators could apply to test products or services in financial and insurance markets under temporary regulatory relief. It also set up safeguards, including application review criteria, oversight mechanisms, and clear consumer protection requirements.
Collaboration at the Core
From the beginning, the Sandbox was designed as a partnership, not just a program.
The NC Innovation Council was built to include representatives from multiple agencies, such as the Office of the Commissioner of Banks and the Department of Insurance, alongside members from academia, industry, and the entrepreneurial community.
This unique structure ensures that every perspective, regulatory, technical, business, and consumer, is at the table when new applications are reviewed. It’s a model of governance that fosters both innovation and public trust.
From Concept to Action: Launching the Sandbox
Following the completion of the rulemaking process, the Council was officially able to begin accepting applications as of March 31, 2025. This marked a significant step in moving the Sandbox from concept to active implementation. The first application was received in July 2025, providing the Council with an opportunity to put its review process into practice and evaluate how the program operates in real time. This initial review helped refine internal procedures and offered valuable insight into how the Sandbox can best support innovators navigating regulatory challenges in North Carolina.
North Carolina’s Leadership in Responsible Innovation
Today, North Carolina’s Sandbox stands out as a model for how states can balance innovation with regulation. By combining clear statutory authority, strong interagency collaboration, and a focus on consumer protection, the program demonstrates that regulation and innovation don’t have to be at odds they can be partners.
The NC Innovation Council continues to engage with entrepreneurs, financial institutions, and emerging technology firms to ensure that North Carolina remains a hub for smart, responsible innovation.
While the Sandbox is still in its early stages, the program’s framework and governance structure are already shaping how innovators and regulators will work together to test and advance new ideas safely and effectively.
As new technologies such as blockchain, AI, and digital identity reshape financial and insurance services, North Carolina’s Regulatory Sandbox ensures the State remains both future-ready and citizen-centered.
Looking Ahead
The Regulatory Sandbox Program is still in its early chapters, but its potential impact is already being recognized. With growing national attention and increasing interest from innovators, North Carolina is setting a standard for how to responsibly accelerate innovation while protecting the public interest.
It’s more than a program; it’s a blueprint for how government and industry can work together to shape the future.