AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND ECONOMIC GROWTH BLOCKCHAIN ACT (Creates a council to supervise, manage and regulate special depository institutions. The act also allows for the controlled issuance of limited waivers of regulatory requirements for the creators of innovative financial products.)

H7413

2026 -- H 7413
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LC004333
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND ECONOMIC
GROWTH BLOCKCHAIN ACT

Introduced By:
Representative David J. Place

Date Introduced:
January 30, 2026

Referred To:
House Corporations
It is enacted by the General Assembly as follows:
1
SECTION 1. Legislative findings.
2
The general assembly finds and declares:
3
(1) It is declared to be the policy of the state to promote a vigorous and growing economy,
4
to prevent economic stagnation, and to encourage the creation of new job opportunities in order to
5
ameliorate the hazards of unemployment and underemployment, reduce the level of public
6
assistance, increase revenues to the state and its municipalities, and to achieve a stable diversified
7
economy.
8
(2) The State of Rhode Island understands that to compete in the twenty-first century
9
economy, Rhode Island must offer one of the best business environments in the United States for
10
blockchain and technology innovators, and should offer a comprehensive regulatory technology
11
sandbox for these innovators to develop the next generation of digital products and services in
12
Rhode Island.
13
(3) Building a more robust public-private partnership framework is mandatory for
14
economic success.
15
(4) The State of Rhode Island understands that further developing technology industries
16
within a robust public-private partnership brings better efficiency, trust, and accountability between
17
Rhode Island state government, businesses, and residents.
18
(5) The state understands a public-private partnership developing an immutable

1
interagency-industry-operability blockchain filing system is vital and redevelopment investment in
2
opportunity zones that shall install, maintain, and organize within the system of blockchain records
3
throughout the state is advantageous.
4
(6) Financial and health technology is undergoing a transformational period in which new
5
technologies are providing greater automation, connectivity and transparency for provenance of
6
products and services:
7
(i) Existing legal frameworks are restricting technology innovation because these
8
frameworks were largely established at a time when technology was not a fundamental component
9
of products and services;
10
(ii) Technology innovators require a supervised, flexible regulatory sandbox to test new
11
products and services using waivers of specified statutes and rules under defined conditions;
12
(iii) Jurisdictions which establish regulatory sandboxes are more likely to provide a
13
welcoming business environment for technology innovators and may experience significant
14
business growth;
15
(iv) Other jurisdictions have enacted, or are considering, regulatory sandboxes for financial
16
technology innovators in their jurisdictions;
17
(7)(i) The rapid innovation of blockchain technology including the growing use of virtual
18
currency and other digital assets has resulted in many blockchain innovators being unable to access
19
secure and reliable banking services thereby hampering development of blockchain services and
20
products in the marketplace;
21
(ii) Federally insured financial institutions are not generally permitted to manage accounts
22
in virtual currency or hold other digital assets;
23
(iii) Blockchain innovators have greater compliance challenges with federal customer
24
identification, anti-money laundering and beneficial ownership requirements because of the
25
complex nature of these obligations and the unfamiliarity of regulators with blockchain innovators'
26
businesses;
27
(iv) These intricate obligations have resulted in many financial institutions in Rhode Island
28
and across the United States refusing to provide banking services to blockchain innovators and also
29
refusing to accept deposits in United States currency obtained from the sale of virtual currency or
30
other digital assets;
31
(v) Compliance with applicable federal and state laws is critical to ensuring the future
32
growth and reputation of the blockchain and technology industries as a whole;
33
(vi) Most financial institutions today do not have the requisite expertise or familiarity with
34
the challenges facing blockchain innovators which is required to provide secure and reliable

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banking services to these innovators;
2
(vii) A new type of Rhode Island financial payments and depository institution that has
3
expertise with customer identification, anti-money laundering and beneficial ownership
4
requirements could seamlessly integrate these requirements into its operating model; and
5
(viii) Authorizing special purpose depository institutions to be chartered in Rhode Island
6
will provide a necessary and valuable service to blockchain innovators, emphasize Rhode Island's
7
partnership with the technology and financial industry and safely grow this state's developing
8
financial sector.
9
SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND
10
GOVERNMENT" is hereby amended by adding thereto the following chapter:
11
CHAPTER 64.35
12
RHODE ISLAND ECONOMIC GROWTH BLOCKCHAIN ACT
13

42-64.35-1. Short title.
14

This chapter shall be known and may be cited as the "Rhode Island Economic Growth
15
Blockchain Act."
16

42-64.35-2. Definitions.
17

As used in this chapter, the following words and phrases shall have the following meanings,
18
unless the context otherwise requires:
19

(1) "Agency" or "public body" means any executive, legislative, judicial, regulatory,
20
administrative body of the state, or any political subdivision thereof: including, but not limited to,
21
any department, division, agency, commission, board, office, bureau, authority, any school, fire, or
22
water district, or other agency or quasi-public agency of Rhode Island state or local government
23
which exercises governmental functions or any other public or private agency, person, partnership,
24
corporation, or business entity acting on behalf of any public agency.
25

(2) "Bank" means any corporation, excluding national banks, having a place of business
26
within this state which engages in banking business, and includes a special purpose depository
27
institution, subject to the limitations set forth in § 42-64.35-5.
28

(3) "Batch" means a specific quantity of real or digital product that is part of a regulated
29
industry, such as hemp or vital records.
30

(4) "Blockchain" means a digital ledger or database which is chronological, consensus-
31
based, decentralized and mathematically verified in nature.
32

(5) "Bureau" means an office or department in charge of administering any agency or bank
33
regulated by the provisions of this chapter.
34

(6) "Custodial services" means the safekeeping and management of customer currency and

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digital assets through the exercise of fiduciary and trust powers under this chapter as a custodian,
2
and includes fund administration and the execution of customer instructions.
3

(7) "Database" means a set of data held on a secured computer software program or
4
encrypted electronic storage system providing an immutable distributed ledger of records.
5

(8) "Department" means the department of business regulation, division of banking.
6

(9) "Developer" means the person primarily responsible for creating an open blockchain
7
token or otherwise designing the token, including by executing the technological processes
8
necessary to create the token;
9

(10) "Digital asset" means a representation of economic, proprietary or access rights that
10
is stored in a computer readable format, and includes digital consumer assets, digital securities and
11
virtual currency;
12

(11) "Digital consumer asset" means a digital asset that is used or bought primarily for
13
consumptive, personal or household purposes and includes:
14

(i) An open blockchain token constituting intangible personal property as otherwise
15
provided by law; and
16

(ii) Any other digital asset which does not fall within the scope of this chapter.
17

(12) "Exchange," used as a verb, means to assume control of virtual currency from or on
18
behalf of a resident, at least momentarily, to sell, trade, or convert:
19

(i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency;
20
or
21

(ii) Legal tender or bank credit for one or more forms of virtual currency.
22

(13) "Facilitator" means a person who, as a business, makes open blockchain tokens under
23
this chapter available for resale to the public after a token has been purchased by an initial buyer.
24

(14) "Fees" means charge(s) imposed by the private entity of a qualifying project for use
25
of all or a portion of such qualifying project pursuant to a comprehensive agreement;
26

(15) "Financial investment" means a contract, transaction or arrangement where a person
27
invests money in a common enterprise and is led to expect profits solely from the efforts of a
28
promoter or a third party.
29

(16) "Financial product or service" means a product or service related to finance, including
30
banking, securities, consumer credit or money transmission, which is subject to statutory or rule
31
requirements identified in title 19 and is under the jurisdiction of the superintendent.
32

(17) "Financial technology sandbox" means the program created by this chapter which
33
allows a person to make an innovative financial product or service available to consumers during a
34
sandbox period through a waiver of existing statutory and rule requirements, or portions thereof,

LC004333 - Page 4 of 28
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by the superintendent.
2

(18) "Innovative" means new or emerging technology, or new uses of existing technology,
3
that provides a product, service, business model or delivery mechanism to the public and has no
4
substantially comparable, widely available analogue in Rhode Island including blockchain
5
technology.
6

(19) "Issuer" means a person that issues or proposes to issue a security
7

(20) "Legal tender" means a medium of exchange or unit of value, including the coin or
8
paper money of the United States, issued by the United States or by another government.
9

(21) "License'' means a state license issued under this chapter, and includes both a
10
cultivation license and a medicinal use license, as well as a testing laboratory license.
11

(22) "Licensee" means any person holding a license under this chapter, regardless of the
12
license held, and includes the holder of a testing laboratory license.
13

(23) "Licensing authority" means the state agency responsible for the issuance, renewal, or
14
reinstatement of the license, or the state agency authorized to take disciplinary action against the
15
licensee.
16

(24) "Local jurisdiction" means a city or town.
17

(25) "Monetary value" means a medium of exchange, whether or not redeemable in money.
18

(26) "Open blockchain token" means a digital unit which is:
19

(i) Created in response to the verification or collection of a specified number of transactions
20
relating to a digital ledger or database;
21

(ii) Created by deploying computer code to a digital ledger or database, which may include
22
a blockchain, that allows for the creation of digital tokens or other units;
23

(iii) Created by using a combination of the methods specified in §§ 42-64.35-4 or 42-64.35-
24
5;
25

(iv) Recorded to a digital ledger or database, which may include a blockchain; or
26

(v) Capable of being traded or transferred between persons without an intermediary or
27
custodian of value.
28

(27) "Opportunity zones" means designated areas included in the Tax Cuts and Jobs Act,
29
Pub. L. No. 115-97 (2017). Rhode Island opportunity zones are located in twenty-five (25) census
30
tracts spread across the following fifteen (15) municipalities: Bristol, Central Falls, Cranston,
31
Cumberland, East Providence, Narragansett, Newport, North Providence, Pawtucket, Providence,
32
South Kingstown. Warren, West Warwick, Westerly, and Woonsocket.
33

(28) "Owner" means any of the following:
34

(i) A person with an aggregate ownership interest of twenty percent (20%) or more in the

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person applying for a license or a licensee, unless the interest is solely a security, lien, or
2
encumbrance;
3

(ii) The chief executive officer of a nonprofit or other entity;
4

(iii) A member of the board of directors of a nonprofit; or
5

(iv) An individual who will be participating in the direction, control, or management of the
6
person applying for a license.
7

(29) "Person" means and includes any individual, firm, partnership, joint venture,
8
association, corporation, limited-liability company, estate, trust, business trust, receiver, syndicate,
9
or any other group or combination acting as a unit, and the plural as well as the singular.
10

(30) "Private entity" means any natural person, corporation, general partnership, limited
11
liability company, limited partnership, joint venture, business trust, public benefit corporation,
12
nonprofit entity, or one other private business entity.
13

(31) "Proposal" means a plan for a qualifying project with detail beyond a conceptual level
14
for which terms such as fixing costs, payment schedules, financing, deliverables, and project
15
schedules are defined.
16

(32) "Qualifying project" means:
17

(i) A facility or project that serves a public purpose, including, but not limited to, any ferry
18
or mass transit facility, vehicle parking facility, airport or seaport facility, rail facility or project,
19
transportation facilities, technology infrastructure, fuel supply facility, oil or gas pipeline, medical
20
or nursing care facility, or educational facility or other building or facility that is used or will be
21
used by a public educational institution, or any other public facility or infrastructure that is used or
22
will be used by the public at large or in support of an accepted public purpose or activity;
23

(ii) An improvement, including equipment, of a building that will be principally used by a
24
public entity or the public at large or that supports a service delivery system in the public sector;
25

(iii) A water, wastewater, or surface water management facility or other related
26
infrastructure; or
27

(iv) Notwithstanding any provision of this subsection, for projects that involve a facility
28
owned or operated by the governing board of a city or town, district, or hospital or health care
29
system, or projects that involve a facility owned or operated by an electric utility, only those
30
projects that the governing board designates as qualifying projects pursuant to this subsection.
31

(33) "Reciprocity agreement" means an arrangement between the department and the
32
appropriate licensing agency of another state that permits a licensee operating under a license
33
granted by the other state to engage in currency transmission business activity with or on behalf of
34
a resident.

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1

(34) "Record" means information that is inscribed on a tangible medium or that is stored
2
in an electronic or other medium and is retrievable in perceivable form.
3

(35) "Registry" means the Nationwide Multistate Licensing System.
4

(36) "Resident" means a person that:
5

(i) Is domiciled in this state;
6

(ii) Is physically located in this state for more than one hundred eighty-three (183) days of
7
the previous three hundred sixty-five (365) days; or
8

(iii) Has a place of business in this state and includes a legal representative of a person that
9
satisfies subsection (36)(i) of this subsection.
10

(37) "Responsible individual" means an individual who has managerial authority with
11
respect to a licensee's currency transmission business activity with or on behalf of a resident.
12

(38) "Revenue" means the income, earnings, user fees, lease payments, or other service
13
payments relating to the development or operation of a qualifying project, including, but no limited
14
to, money received as grants or otherwise from the federal government, a public entity, or an agency
15
or instrumentality thereof in aid of the qualifying project.
16

(39) "Sandbox period" means the period of time, initially not longer than twenty-four (24)
17
months, in which the department's superintendent of banking has authorized an innovative financial
18
product or service to be made available to consumers, which shall also encompass any extension
19
granted under §§ 42-64.35-l through 42-64.35-5.
20

(40) "Secretary" means the secretary of state;
21

(41) "Seller" means a person who makes an open blockchain token available for purchase
22
to an initial buyer.
23

(42) "Service contract" means a contract between a public entity and the private entity
24
which defines the terms of the services to be provided with respect to a qualifying project.
25

(43) "Sign" means with present intent to authenticate or adopt a record, to execute or adopt
26
a tangible symbol or to attach to or logically associate with the record an electronic symbol, sound,
27
or process.
28

(44) "Special purpose depository institution" means a corporation operating pursuant to §
29
42-64.35-5;
30

(45) "State" means a state of the United States, the District of Columbia, Puerto Rico, the
31
United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the
32
United States.
33

(46) "Store," except in the phrase "store of value," means to maintain control of virtual
34
currency on behalf of a resident by a person other than the resident. "Storage" and "storing" have

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1
corresponding meanings.
2

(47) "Superintendent" means the deputy director designated by the department's director
3
as superintendent of banking in the department.
4

(48) "Supervisor of the regulatory body" means the chief or head of a section having
5
enforcement responsibility for a particular statute or set of rules and regulations within a regulatory
6
agency.
7

(49) "System of vital records" means the registration, collection, preservation, amendment,
8
and certification of vital statistics records, and activities related to them including the tabulation,
9
analysis, and publication of statistical data derived from those records.
10

(50) "Transfer" means to assume control of virtual currency from or on behalf of a resident
11
and to:
12

(i) Credit the virtual currency to the account of another person;
13

(ii) Move the virtual currency from one account of a resident to another account of the
14
same resident; or
15

(iii) Relinquish control of virtual currency to another person.
16

(51) "Unique identifier" means an alphanumeric code or designation used for reference to
17
a specific plant on a licensed premises.
18

(52) "U.S. Dollar equivalent of virtual currency" means the equivalent value of a particular
19
virtual currency in United States dollars shown on a virtual currency exchange based in the United
20
States for a particular date or period specified in this chapter. Virtual currency or a digital security,
21
as defined in §§ 19-14-1 and 19-14.3-1.1, shall not constitute an open blockchain token as defined
22
within §§ 42-64.35-4 and 42-64.35-5.
23

42-64.35-3. Council established.
24

There is hereby created a Rhode Island blockchain technology advisory council to consist
25
of thirteen (13) members: three (3) of whom shall be appointed by the governor, with two (2) of
26
those so appointed to be designated by the governor as co-chairs; six (6) of whom shall be directors
27
from the Rhode Island commerce corporation, as established by chapter 64 of title 42; four (4)
28
members shall be appointed by majority of the nine (9) members appointed by the governor and
29
Rhode Island commerce corporation; two (2) of the four members shall be appointed from the
30
private sector: with one holding expertise in complex financial services, and one with expertise in
31
cybersecurity; two (2) of the four members shall be appointed from academia: with one holding
32
expertise in financial systems, and one with expertise in computer engineering. The membership
33
of said council shall receive no compensation for their services. The council shall support the state's
34
research institutions, promote entrepreneurial development, enable all organizations to become

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1
more innovative, and perform any other advisory functions as the legislature may designate.
2

42-64.35-4. Financial sandbox -- Financial technology sandbox waiver -- Applicability
3
of criminal and consumer protection statutes -- Referral to investigatory agencies -- Civil
4
liability.
5

(a) Notwithstanding any other provision of law, a person who makes an innovative
6
financial product or service available to consumers in the financial technology sandbox may be
7
granted a waiver of specified requirements imposed by statute or rule, or portions thereof, if these
8
statutes or rules do not currently permit the product or service to be made available to consumers.
9
A waiver under this subsection shall be no broader than necessary to accomplish the purposes and
10
standards set forth in this chapter, as determined by the superintendent.
11

(b) A person who makes an innovative financial product or service available to consumers
12
in the financial technology sandbox is:
13

(1) Not immune from civil damages for acts and omissions relating to this chapter; and
14

(2) Subject to all criminal and consumer protection laws, including, but not limited to,
15
violations of any provisions of title 11, title 19, and title 21.
16

(c) The superintendent may refer suspected violations of law relating to this chapter to
17
appropriate state or federal agencies for investigation, prosecution, civil penalties and other
18
appropriate enforcement actions, including, but not limited to, suspension or revocation of any
19
license or authorization granted under this chapter.
20

(d) If service of process, relative to any civil proceeding, on a person making an innovative
21
financial product or service available to consumers in the financial technology sandbox is not
22
feasible, service on the secretary of state shall be deemed service on the person.
23

(e)(1) A person shall apply to the superintendent to make an innovative financial product
24
or service available to consumers in the financial technology sandbox, based on the office that
25
administers the statute, regulation, rule or portion thereof, for which a waiver is sought.
26

(2) If the superintendent administers a statute or regulation or rule, or if the appropriate
27
office is not known, an application may be filed with the superintendent.
28

(3) If an application is filed with an office that does not administer the statute, regulation
29
or rule for which a waiver is sought, the receiving office shall forward the application to the correct
30
office.
31

(4) The person shall specify in an application the statutory or rule requirements for which
32
a waiver is sought and the reasons why these requirements prohibit the innovative financial product
33
or service from being made available to consumers. The superintendent shall, by rule, prescribe a
34
method of application.

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1

(f) A business entity making an application under this section shall be a domestic
2
corporation or other organized domestic entity with a physical presence, other than that of a
3
registered office or agent, in Rhode Island.
4

(g) Before an employee applies on behalf of an institution, firm or other entity intending to
5
make an innovative financial product or service available through the financial technology sandbox,
6
the employee shall obtain the consent of the institution, firm or entity before filing an application
7
under this section.
8

(h) The individual filing an application under this section and the individuals who are
9
substantially involved in the development, operation or management of the innovative financial
10
product or service shall, as a condition of an application, submit to a criminal history background
11
check with the department of attorney general.
12

(i) An application made under this section shall be accompanied by a fee of five hundred
13
dollars ($500). The fee shall be deposited into the financial technology innovation account as
14
required by subsection (o) of this section.
15

(j) The superintendent, as applicable, shall authorize or deny a financial technology
16
sandbox application in writing within ninety (90) days of receiving the application. The
17
superintendent and the person who has made an application may jointly agree to extend the time
18
beyond ninety (90) days. The superintendent may impose conditions on any authorization,
19
consistent with this chapter. In deciding to authorize or deny an application under this section, the
20
superintendent shall consider each of the following:
21

(1) The nature of the innovative financial product or service proposed to be made available
22
to consumers in the sandbox, including all relevant technical details which may include whether
23
the product or service utilizes blockchain technology;
24

(2) The potential risk to consumers and methods which will be used to protect consumers
25
and resolve complaints during the sandbox period;
26

(3) A business plan proposed by the person, including proof of capital requirements;
27

(4) Whether the person has the necessary personnel, adequate financial and technical
28
expertise and a sufficient plan to test, monitor and assess the innovative financial product or service;
29

(5) Whether any person substantially involved in the development, operation or
30
management of the innovative financial product or service has been convicted of, or is currently
31
under investigation for, fraud, state or federal securities violations or any property based offense;
32

(6) A copy of the disclosures required under this chapter that will be provided to
33
consumers; and
34

(7) Any other factor that the superintendent determines to be relevant.

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1

(k) If an application is authorized under subsection (j) of this section, the superintendent
2
shall specify the statutory or rule requirements, or portions thereof, for which a waiver is granted
3
and the length of the initial sandbox period. The superintendent shall also post notice of the
4
approval of a sandbox application under this section, a summary of the innovative financial product
5
or service and the contact information of the person making the product or service available through
6
the sandbox on the Internet website of the superintendent.
7

(l) A person authorized under subsection (j) of this section to enter into the financial
8
technology sandbox shall post a consumer protection bond with the superintendent as security for
9
potential losses suffered by consumers. The bond amount shall be determined by the superintendent
10
in an amount not less than ten thousand dollars ($10,000) and shall be commensurate with the risk
11
profile of the innovative financial product or service. The superintendent may require that a bond
12
under this subsection be increased or decreased at any time based on risk profile. Unless the bond
13
is enforced, the superintendent shall cancel or allow the bond to expire two (2) years after the date
14
of the conclusion of the sandbox period.
15

(m) A person authorized under subsection (j) of this section to enter into the financial
16
technology sandbox shall be deemed to possess an appropriate license for the purposes of federal
17
law requiring state licensure or authorization.
18

(n) Authorization under subsection (j) of this section shall not be construed to create a
19
property right.
20

(o)(1) There is hereby created the financial technology innovation account. Funds within
21
the account shall only be expended by legislative appropriation. All funds within the account shall
22
be invested by the state treasurer and all investment earnings from the account shall be credited to
23
the general fund. The account shall be divided into two (2) sub-accounts controlled by the
24
superintendent, respectively, for the purposes of administrative management. For the purposes of
25
accounting and investing only, the subaccounts shall be treated as separate accounts.
26

(2) Subject to legislative appropriation, application fees remitted to the account shall be
27
deposited into the subaccount controlled by the superintendent, as applicable, based on the
28
receiving official. These funds, and any additional funds appropriated by the legislature, shall be
29
used only for the purposes of administering this chapter, including processing of sandbox
30
applications and monitoring, examination and enforcement activities relating to this chapter.
31

(p)(1) Except as otherwise provided under chapter 56 of title 6 ("uniform supplemental
32
commercial law for the uniform regulation of virtual-currency businesses act"), chapter 14 of title
33
19 ("licensed activities"), and chapter 14.3 of title 19 ("currency transmissions"), a person
34
authorized under this chapter to enter into the financial technology sandbox may make an

LC004333 - Page 11 of 28
1
innovative financial product or service available to consumers during the sandbox period.
2

(2) The superintendent may, on a case by case basis, specify the maximum number of
3
consumers permitted to receive an innovative financial product or service, after consultation with
4
the person authorized under this chapter to make the product or service available in the financial
5
technology sandbox.
6

(3) Before a consumer purchases or enters into an agreement to receive an innovative
7
financial product or service through the financial technology sandbox, the person making the
8
product or service available shall provide a written statement of the following to the consumer:
9

(i) The name and contact information of the person making the product or service available
10
to consumers;
11

(ii) That the product or service has been authorized to be made available to consumers for
12
a temporary period by the superintendent, as applicable, under the laws of Rhode Island;
13

(iii) That the State of Rhode Island does not endorse the product or service and is not
14
subject to liability for losses or damages caused by the product or service;
15

(iv) That the product or service is undergoing testing, may not function as intended and
16
may entail financial risk;
17

(v) That the person making the product or service available to consumers is not immune
18
from civil liability for any losses or damages caused by the product or service;
19

(vi) The expected end date of the sandbox period;
20

(vii) The name and contact information of the superintendent, as applicable, and
21
notification that suspected legal violations, complaints or other comments related to the product or
22
service may be submitted to the superintendent; and
23

(viii) Any other statements or disclosures required by rule of the superintendent which are
24
necessary to further the purposes of this chapter.
25

(q) A person authorized to make an innovative financial product or service available to
26
consumers in the financial technology sandbox shall maintain comprehensive records relating to
27
the innovative financial product or service. The person shall keep these records for not less than
28
five (5) years after the conclusion of the sandbox period. The superintendent may specify further
29
records requirements under this subsection by rule.
30

(r) The superintendent, as applicable, may examine the records maintained under or by any
31
depository or financial technology innovation account opened pursuant to this chapter, with or
32
without notice. All direct and indirect costs of an examination conducted under this subsection shall
33
be paid by the person making the innovative financial product or service available in the financial
34
technology sandbox. Records made available to the superintendent under this subsection shall be

LC004333 - Page 12 of 28
1
confidential and shall not be subject to disclosure under chapter 2 of title 38; provided, however,
2
the records may be released to appropriate state and federal agencies for the purposes of
3
investigation.
4

(s) Unless granted an extension not less than thirty (30) days before the conclusion of the
5
sandbox period, a person who makes an innovative financial product or service available in the
6
financial technology sandbox shall provide written notification to consumers regarding the
7
conclusion of the sandbox period and shall not make the product or service available to any new
8
consumers after the conclusion of the sandbox period until legal authority outside of the sandbox
9
exists to make the product or service available to consumers. The person shall wind down
10
operations with existing consumers within sixty (60) days after the conclusion of the sandbox
11
period, except that, after the sixtieth day, the person may:
12

(1) Collect and receive money owed to the person and service loans made by the person,
13
based on agreements with consumers made before the conclusion of the sandbox period;
14

(2) Take necessary legal action; and
15

(3) Take other actions authorized by the superintendent by rule which are not inconsistent
16
with this subsection.
17

(t) The superintendent may, enter into agreements with state, federal or foreign regulatory
18
agencies to allow persons who make an innovative financial product or service available in Rhode
19
Island through the financial technology sandbox to make their products or services available in
20
other jurisdictions and to allow persons operating in similar financial technology sandboxes in other
21
jurisdictions to make innovative financial products and services available in Rhode Island under
22
the standards of this chapter.
23

(u) The superintendent may, by order, revoke or suspend authorization granted to a person
24
under this chapter if:
25

(1) The person has violated or refused to comply with this chapter or any lawful rule, order
26
or decision adopted by the superintendent;
27

(2) A fact or condition exists that, if it had existed or become known at the time of the
28
financial technology sandbox application, would have warranted denial of the application or the
29
imposition of material conditions;
30

(3) A material error, false statement, misrepresentation or material omission was made in
31
the financial technology sandbox application; or
32

(4) After consultation with the person, continued testing of the innovative financial product
33
or service would:
34

(i) Be likely to harm consumers; or

LC004333 - Page 13 of 28
1

(ii) No longer serve the purposes of this chapter because of the financial or operational
2
failure of the product or service.
3

(v) Written notification of a revocation or suspension order made under subsection (c) of
4
this section shall be served using any means authorized by law, and if the notice relates to a
5
suspension, include any conditions or remedial action which shall be completed before the
6
suspension will be lifted by the superintendent.
7

(w) A person granted authorization under subsection (j) of this section may apply for an
8
extension of the initial sandbox period for not more than twelve (12) additional months. An
9
application for an extension shall be made not later than sixty (60) days before the conclusion of
10
the initial sandbox period specified by the superintendent. The superintendent shall approve or deny
11
the application for extension in writing not later than thirty-five (35) days before the conclusion of
12
the initial sandbox period. An application for extension by a person shall cite one of the following
13
reasons as the basis for the application and provide all relevant supporting information that:
14

(1) Statutory or rule amendments are necessary to conduct business in Rhode Island on a
15
permanent basis; or
16

(2) An application for a license or other authorization required to conduct business in
17
Rhode Island on a permanent basis has been filed with the appropriate office and approval is
18
currently pending.
19

(x)(1) The superintendent shall adopt rules and regulations to implement this chapter. The
20
rules and regulations adopted by the superintendent under this chapter shall be as consistent as
21
reasonably possible, but shall account for differences in the statutes and programs administered by
22
the superintendent.
23

(2) The superintendent may issue:
24

(i) All necessary orders to enforce this chapter, including, but not limited to, ordering the
25
payment of restitution and enforcement of these orders in any court of competent jurisdiction; and
26

(ii) An order under subsection (x)(2)(i) of this section to enforce the bond or portion of the
27
bond posted under this chapter, and use proceeds from the bond to offset losses suffered by
28
consumers as a result of an innovative financial product or service.
29

(3) All actions of the superintendent under this chapter shall be subject to the rules and
30
regulations under title 19 and chapter 14 of title 42.
31

(y)(1) Criminal history record information shall be disseminated by criminal justice
32
agencies in this state, whether directly or through any intermediary, only to the superintendent for
33
purposes of obtaining background information on persons applying for financial technology
34
sandbox authorization; provided, however, that all officers and directors subsequently hired or

LC004333 - Page 14 of 28
1
appointed, shall be required to submit to a criminal history background check.
2

(z)(1) The following persons shall be required to submit to fingerprinting in order to obtain
3
state and national criminal history record information:
4

(i) Applicants for a financial technology sandbox authorization.
5

(aa) The financial technology sandbox definitions shall apply to this chapter.
6

(bb) This chapter modifies, limits, and supersedes the federal Electronic Signatures in
7
Global and National Commerce Act, but does not modify, limit, or supersede section 101(c) of that
8
act (15 U.S.C. § 7001 (c)) or authorize electronic delivery of any of the notices described in section
9
103(b) of that act (15 U.S.C. § 7003(b)). This chapter authorizes the filing of records and signatures,
10
when specified by provisions of this chapter or by a rule adopted or order issued under this chapter,
11
in a manner consistent with section 104(a) of that act (15 U.S.C. § 7004(a)).
12

42-64.35-5. Special depository institutions.
13

(a) The legislature shall create special purpose depository institutions as a new financial
14
institution, providing that the following rules shall apply to these institutions:
15

(1) Special purpose depository institutions shall be corporations;
16

(2) Require that depositors be business entities;
17

(3) Specify compliance with applicable federal laws;
18

(4) Establish procedures for the incorporation, chartering and operation of special purpose
19
depository institutions;
20

(5) Establish procedures for liquidation, conservatorship and voluntary dissolution;
21

(6) Require a surety bond or pledged investments and specified private insurance;
22

(7) Authorize special purpose depository institutions to obtain federal deposit insurance;
23

(8) Make conforming amendments;
24

(9) Authorize positions;
25

(10) Provide an appropriation; and
26

(11) Provide for effective dates.
27

(b) Except as otherwise provided in this section, if any provision of law conflicts with this
28
chapter, this chapter shall control, except as to those provisions set forth in §42-64.35-6.
29

(1) Consistent with this chapter, special purpose depository institutions shall be organized
30
as corporations under chapter 1.2 of title 7, (the "Rhode Island business corporation act"), to
31
exercise the powers set forth in this section;
32

(2) Each special purpose depository institution may:
33

(i) Make contracts as a corporation under Rhode Island law;
34

(ii) Sue and be sued;

LC004333 - Page 15 of 28
1

(iii) Receive notes and buy and sell gold and silver coins and bullion as permitted by federal
2
law;
3

(iv) Carry on a non-lending banking business for depositors, consistent with subsection (d)
4
of this section;
5

(v) Provide payment services upon the request of a depositor;
6

(vi) Make an application to become a member bank of the Federal Reserve System;
7

(vii) Engage in any other activity that is usual or incidental to the business of banking,
8
subject to the prior written approval of the superintendent. The superintendent shall not approve a
9
request to engage in an incidental activity if the superintendent finds that the requested activity will
10
adversely affect the solvency or the safety and soundness of the special purpose depository
11
institution or conflict with any provision of this chapter; and
12

(viii) Exercise powers and rights otherwise authorized by law which are not inconsistent
13
with this chapter.
14

(d) Except as otherwise provided in this subsection, a special purpose depository institution
15
shall not make loans, including the provision of temporary credit relating to overdrafts. A special
16
purpose depository institution may purchase debt obligations consistent with provisions of title 19.
17

(e) A special purpose depository institution shall maintain its principal operating
18
headquarters and the primary office of its chief executive officer in Rhode Island.
19

(f) As otherwise authorized by this section, the special purpose depository institution may
20
conduct business with depositors outside this state.
21

(g) Subject to the laws of Rhode Island, a special purpose depository institution may open
22
a branch in another state upon obtaining a certificate of good standing from the superintendent, as
23
long as any new branch located outside of this state is in compliance with state and federal
24
regulations. A special purpose depository institution, including any branch of the institution, may
25
only accept deposits or provide other services under this chapter to depositors engaged in a bona
26
fide business which is lawful under the laws of Rhode Island, the laws of the host state and federal
27
law.
28

(h)(1) No depositor shall maintain an account with a special purpose depository institution
29
or otherwise receive any services from the institution unless the depositor meets the criteria of this
30
subsection. A depositor shall:
31

(i) Be a legal entity other than a natural person;
32

(ii) Be in good standing with the jurisdiction in the United States in which it is incorporated
33
or organized;
34

(iii) Maintain deposits with the institution totaling not less than five thousand dollars

LC004333 - Page 16 of 28
1
($5,000);
2

(iv) Be engaged in a lawful, bona fide business; and
3

(v) Make sufficient evidence available to the special purpose depository institution to
4
enable compliance with anti-money laundering practices, customer identification and beneficial
5
ownership requirements, as determined by the institution.
6

(2) A depositor which meets the criteria of this subsection (h) shall be issued a depository
7
account and otherwise receive services from the special purpose depository institution contingent
8
on the availability of sufficient insurance as required under § 19-4-10.
9

(3) Consistent with this subsection (h) of this section and in addition to any requirements
10
specified by federal law, a special purpose depository institution shall require that a potential
11
depositor provide reasonable evidence that the person is engaged in a lawful, bona fide business or
12
is likely to open a lawful, bona fide business within the next six (6) months. As used in this
13
subsection, "reasonable evidence" includes business entity filings, articles of incorporation or
14
organization, bylaws, operating agreements, business plans, promotional materials, financing
15
agreements or other evidence.
16

(i)(1) At all times, a special purpose depository institution shall maintain unencumbered
17
liquid assets valued at not less than one hundred percent (100%) of its depository liabilities;
18

(2) As used in this section, "liquid assets" means:
19

(i) United States currency held on the premises of the special purpose depository
20
institution;
21

(ii) United States currency held for the special purpose depository institution by a federal
22
reserve bank or a federally insured financial institution; and
23

(iii) Investments which are highly liquid, and obligations of the United States treasury or
24
other federal agency obligations consistent with rules adopted by the superintendent.
25

(j)(1) A special purpose depository institution shall maintain a contingency account to
26
account for unexpected losses and expenses. A special purpose depository institution may require
27
the payment of contributions from depositors to fund a contingency account. Sufficient funding as
28
determined and required by the superintendent for the initial capitalization shall constitute
29
compliance with this subsection for the first three (3) years a special purpose depository institution
30
is in operation. After the conclusion of the first three (3) years of operation, a special purpose
31
depository institution shall maintain a contingency account totaling not less than two percent (2%)
32
of the depository liabilities of the special purpose depository institution; provided, however, that
33
the contingency account shall be adequate and reasonable in light of current and prospective
34
business conditions. as determined by the superintendent;

LC004333 - Page 17 of 28
1

(2) A depositor shall obtain a refund of any contingency account contributions made under
2
this subsection after closing an account with the special purpose depository institution.
3

(k) A special purpose depository institution shall comply with all applicable federal laws,
4
including, but not limited to, those relating to anti-money laundering practices, customer
5
identification and beneficial ownership.
6

(l)(1) A special purpose depository institution shall display on any Internet website it
7
maintains, and at each window or place where it accepts deposits, a sign conspicuously stating that
8
deposits are not insured by the federal deposit insurance corporation, if applicable.
9

(2) Upon opening an account and if applicable, a special purpose depository institution
10
shall require each depositor to execute a statement acknowledging that all deposits at the special
11
purpose depository institution are not insured by the federal deposit insurance corporation. The
12
special purpose depository institution shall permanently retain this acknowledgment.
13

(3) A special purpose depository institution shall include in all advertising a disclosure that
14
deposits are not insured by the federal deposit insurance corporation, if applicable.
15

(m)(1) Except as otherwise provided, five (5) or more adult persons may form a special
16
purpose depository institution. The incorporators shall subscribe the articles of incorporation and
17
transmit them to the superintendent as part of an application for a charter under title 19.
18

(2) The articles of incorporation shall include the following information:
19

(i) The corporate name;
20

(ii) The purpose for which the corporation is organized;
21

(iii) The term of its existence, which may be perpetual;
22

(iv) The place where its office shall be located and its operations conducted;
23

(v) The amount of capital stock and the number of shares;
24

(vi) The name and residence of each shareholder subscribing to more than ten percent
25
(10%) of the stock and the number of shares owned by that shareholder;
26

(vii) The number of directors and the names of those who shall manage the affairs of the
27
corporation for the first year; and
28

(viii) A statement that the articles of incorporation are made to enable the incorporators to
29
avail themselves of the advantages of the laws of the state.
30

(n) Copies of all amended articles of incorporation shall be filed in the same manner as the
31
original articles of incorporation.
32

(o) The incorporators shall raise sufficient capital prior to filing an application for a charter
33
with the superintendent, consistent with § 19-2-2. In the event an application for a charter is not
34
filed or is denied, all capital shall be promptly returned without loss, to each person or entity

LC004333 - Page 18 of 28
1
investing.
2

(p) Subject to applicable federal and state law, a bank holding company may apply to hold
3
a special purpose depository institution to raise required initial capital and surplus and additional
4
capital.
5

(q) The capital stock of each special purpose depository institution chartered under this
6
chapter shall be subscribed for as fully paid stock. No special purpose depository institution shall
7
be chartered with capital stock less than five million dollars ($5,000,000).
8

(r) No special purpose depository institution shall commence business until the full amount
9
of its authorized capital is subscribed and all capital stock is fully paid in. No special purpose
10
depository institution may be chartered without a paid up surplus fund of not less than three (3)
11
years of estimated operating expenses in an amount to be determined by the superintendent;
12

(s) A special purpose depository institution may acquire additional capital prior to the
13
granting of a charter and may report this capital in its charter application.
14

(t)(1) No person shall act as a special purpose depository institution without first obtaining
15
a charter and certificate of authority to operate from the superintendent under this chapter
16

(2) The incorporators, pursuant to subsection (o) of this section, shall apply to the
17
superintendent for a charter. The application shall contain the special purpose depository
18
institution's articles of incorporation, a detailed business plan, a comprehensive estimate of
19
operating expenses for the first three (3) years of operation, a complete proposal for compliance
20
with the provisions of this chapter and evidence of the capital as required under subsection (s) of
21
this section. The superintendent may prescribe the form of application by rule.
22

(3) Each application for a charter shall be accompanied by an application fee established
23
by the superintendent pursuant to rule, which shall be no greater than the costs incurred by the
24
superintendent in reviewing the application. The application fee shall be credited to the special
25
purpose depository institutions subaccount created by subsection (o) of this section
26

(u) Funds in the subaccount shall be used by the superintendent to supervise special
27
purpose depository institutions and to otherwise carry out the duties specified by this chapter. Funds
28
in the subaccount are continuously appropriated to the subaccount and shall not lapse at the end of
29
any fiscal period. For purposes of accounting and investing only the special purpose depository
30
institutions subaccount shall be treated as a separate account from the financial institutions
31
administration account.
32

(v)(1) Upon receiving an application for a special purpose depository charter, the
33
superintendent shall notify the applicants in writing within thirty (30) calendar days of any
34
deficiency in the required information or that the application has been accepted for filing. When

LC004333 - Page 19 of 28
1
the superintendent is satisfied that all required information has been furnished, the superintendent
2
shall establish a time and place for a public hearing which shall be conducted not less than sixty
3
(60) days, nor more than one hundred twenty (120) days, after notice from the superintendent to
4
the applicants that the application is in order.
5

(2) Within thirty (30) days after receipt of notice of the time and place of the public hearing,
6
the applicants shall cause notice of filing of the application and the hearing to be published at the
7
applicant's expense in a newspaper of general circulation within the county where the proposed
8
special purpose depository institution is to be located. Publication shall be made at least once a
9
week for three (3) consecutive weeks before the hearing and shall state: the proposed location of
10
the special purpose depository institution; the names of the applicants for a charter; the nature of
11
the activities to be conducted by the proposed institution and other information required by rule.
12
The applicants shall furnish proof of publication to the superintendent not more than ten (10) days
13
prior to the hearing. The superintendent shall send notice of the hearing to state and national banks,
14
federal savings and loan associations and other financial institutions in the state and federal
15
agencies who have requested notice from the superintendent.
16

(w) The hearing for a charter application shall be conducted as a contested case under
17
chapter 35 of title 42 ("administrative procedures") and shall comply with the requirements of that
18
chapter.
19

(x)(1) Upon receiving the articles of incorporation, the application for a charter and other
20
information required by the superintendent, the superintendent shall make a careful investigation
21
and examination of the following:
22

(i) The character, reputation, financial standing and ability of the incorporators;
23

(ii) The character, financial responsibility, banking or other financial experience and
24
business qualifications of those proposed as officers and directors; and
25

(iii) The application for a charter, including the adequacy and plausibility of the business
26
plan of the special purpose depository institution and whether the institution has offered a complete
27
proposal for compliance with the provisions of this chapter.
28

(2) The superintendent shall submit the results of the superintendent's investigation and
29
examination at the public hearing on the charter application and shall be subject to cross
30
examination by any interested party. No relevant information shall be excluded as hearsay.
31

(y)(1) Within ninety (90) days after receipt of the transcript of the public hearing, the
32
superintendent shall render a decision on the charter application based solely on the following
33
criteria:
34

(i) Whether the character, reputation, financial standing and ability of the incorporators is

LC004333 - Page 20 of 28
1
sufficient to afford reasonable promise of a successful operation;
2

(ii) Whether the character, financial responsibility, banking or other financial experience
3
and business qualifications of those proposed as officers and directors is sufficient to afford
4
reasonable promise of a successful operation;
5

(iii) The adequacy and plausibility of the business plan of the special purpose depository
6
institution;
7

(iv) Compliance with the capital and surplus requirements as set forth in this section;
8

(v) The special purpose depository institution is being formed for no other purpose than
9
legitimate objectives authorized by law;
10

(vi) That the name of the proposed special purpose depository institution does not resemble
11
so closely the name of any other financial institution transacting business in the state so as to cause
12
confusion; and
13

(vii) Whether the applicants have complied with all applicable provisions of state law.
14

(2) The superintendent shall approve an application upon making favorable findings on the
15
criteria set forth in this section. If necessary, the superintendent may either conditionally approve
16
an application by specifying conditions relating to the criteria or may disapprove the application.
17
The superintendent shall state findings of fact and conclusions of law as part of its decision. If the
18
superintendent approves the application, the superintendent shall endorse upon the articles of
19
incorporation the approval of the superintendent and shall transmit one copy to the secretary of
20
state, retain one copy and return a copy to the applicants within twenty (20) days after the date of
21
the decision of the superintendent approving the application. If the superintendent conditionally
22
approves an application and upon compliance with necessary conditions required by the
23
superintendent, the superintendent shall proceed as provided in the preceding sentence. If the
24
superintendent disapproves the application, the superintendent shall mail notice of the disapproval
25
to the applicants within twenty (20) days of the superintendent's disapproval.
26

(z)(1) If an application is approved and a charter granted by the superintendent, the special
27
purpose depository institution shall not commence business before receiving a certificate of
28
authority to operate from the superintendent. The application for a certificate of authority shall be
29
made to the superintendent and shall certify the address at which the special purpose depository
30
institution will operate and that all adopted bylaws of the institution have been attached as an exhibit
31
to the application. The application shall state the identities and contact information of officers and
32
directors. The superintendent shall approve or deny an application for a certificate of authority to
33
operate within thirty (30) days after a complete application has been filed. The authority of the
34
superintendent to disapprove any application shall be restricted solely to noncompliance with this

LC004333 - Page 21 of 28
1
section; provided that, if the superintendent approves the application, the superintendent shall issue
2
a certificate of authority to the applicants within twenty (20) days. If the superintendent denies the
3
application, the superintendent shall mail a notice of denial to the applicants within twenty (20)
4
days, stating the reasons for denying the application, and grant to the applicants a period of ninety
5
(90) days to resubmit the application with the necessary corrections. If the applicants fail to comply
6
with requirements of the notice of denial within ninety (90) days from the receipt of the notice, the
7
charter of the special purpose depository institution shall be revoked by the superintendent. The
8
failure of the superintendent to act upon an application for a certificate of authority within thirty
9
(30) days shall be deemed an approval
10

(2) If an approved special purpose depository institution fails to commence business in
11
good faith within six (6) months after the issuance of a certificate of authority to operate by the
12
superintendent, the charter and certificate of authority shall expire. The superintendent, for good
13
cause and upon an application filed prior to the expiration of the six (6) month period, may extend
14
the time within which the special purpose depository institution may open for business.
15

(aa) Any decision of the superintendent in approving, conditionally approving or
16
disapproving a charter for a special purpose depository institution or the issuance or denial of a
17
certificate of authority to operate is appealable to the district court of the county in which the
18
institution is to be located, in accordance with the provisions of chapter 35 of title 42
19
("administrative procedures"). In addition to the grounds for appeal contained in chapter 35 of title
20
42 ("administrative procedures"), an appellant may appeal if the superintendent fails to make any
21
of the required findings or otherwise take an action required by law.
22

(bb)(1) Except as otherwise provided by this section, a special purpose depository
23
institution shall, before transacting any business, pledge or furnish a surety bond to the
24
superintendent to cover costs likely to be incurred by the superintendent in a liquidation or
25
conservatorship of the special purpose depository institution. The amount of the surety bond or
26
pledge of assets under this section shall be determined by the superintendent in an amount sufficient
27
to defray the costs of a liquidation or conservatorship.
28

(2) In lieu of a bond, a special purpose depository institution may irrevocably pledge
29
specified capital equivalent to a bond to satisfy this subsection. Any capital pledged to the
30
superintendent under this subsection shall be held in a state or nationally chartered bank or savings
31
and loan association having a principal or branch office in this state. All costs associated with
32
pledging and holding such capital are the responsibility of the special purpose depository
33
institution.
34

(3) Capital pledged to the superintendent shall be of the same nature and quality as those

LC004333 - Page 22 of 28
1
required for state financial institutions under title 19.
2

(4) Surety bonds shall run to the State of Rhode Island, and shall be approved under the
3
terms and conditions established by the superintendent pursuant to the superintendent's authority.
4

(5) The superintendent may adopt rules to establish additional investment guidelines or
5
investment options for purposes of the pledge or surety bond required by this subsection.
6

(6) In the event of a liquidation or conservatorship of a special purpose depository
7
institution pursuant to chapters 10, 11 or 12 of title 19, the superintendent may, without regard to
8
priorities, preferences or adverse claims, reduce the surety bond or capital pledged under this
9
section to cash as soon as practicable and utilize the cash to defray the costs associated with the
10
liquidation or conservatorship.
11

(7) Income from capital pledged under this subsection shall be paid to the special purpose
12
depository institution, unless a liquidation or conservatorship takes place.
13

(8) Upon evidence that the current surety bond or pledged capital is insufficient, the
14
superintendent may require a special purpose depository institution to increase its surety bond or
15
pledged capital by providing not less than thirty (30) days' written notice to the institution. The
16
special purpose depository institution may request a hearing before the superintendent not more
17
than thirty (30) days after receiving written notice from the superintendent under this subsection.
18
Any hearing before the superintendent shall be held pursuant to chapter 35 of title 42
19
("administrative procedures").
20

(cc)(1) The superintendent may call for reports verified under oath from a special purpose
21
depository institution at any time as necessary to inform the superintendent of the condition of the
22
institution.
23

(2) All reports required of special purpose depository institutions by the superintendent and
24
all materials relating to examinations of these institutions shall be subject to the provisions of
25
chapter 4 of title 19.
26

(3) Every special purpose depository institution is subject to the examination of the
27
superintendent. The superintendent or a duly appointed examiner shall visit and examine special
28
purpose depository institutions on a schedule established by rule. The superintendent or a duly
29
appointed examiner shall make a complete and careful examination of the condition and resources
30
of a special purpose depository institution, the mode of managing institution affairs and conducting
31
business, the actions of officers and directors in the investment and disposition of funds, the safety
32
and prudence of institution management, compliance with the requirements of this chapter and such
33
other matters as the superintendent may require. After an examination, the special purpose
34
depository institution shall remit to the superintendent an amount equal to the total cost of the

LC004333 - Page 23 of 28
1
examination. This amount shall be remitted to the state treasurer and deposited into the special
2
purpose depository institutions subaccount established under this chapter.
3

(4) On or before January 31 and July 31 of each year, a special purpose depository
4
institution shall compute and pay supervisory fees to the superintendent based on the total assets of
5
the special purpose depository institution as of the preceding December 31 and June 30,
6
respectively. Supervisory fees under this section shall provide for the operating costs of the office
7
of the superintendent and the administration of the laws governing special purpose depository
8
institutions. Such fees shall be established by rule of the superintendent and shall be adjusted by
9
the superintendent to ensure consistency with the cost of supervision. Supervisory fees shall be
10
deposited by the superintendent with the state treasurer and credited to the special purpose
11
depository institutions subaccount established under this chapter
12

(5) A special purpose depository institution shall maintain appropriate insurance or a bond
13
covering the operational risks of the institution, which shall include coverage for directors' and
14
officers' liability, errors and omissions liability and information technology infrastructure and
15
activities liability.
16

(dd)(1) The superintendent may suspend or revoke the charter of a special purpose
17
depository institution if, after notice and opportunity for a hearing, the superintendent determines
18
that:
19

(i) The special purpose depository institution has failed or refused to comply with an order
20
issued by the superintendent or other regulatory body;
21

(ii) The application for a charter contained a false statement or material misrepresentation
22
or material omission; or
23

(iii) An officer, director or agent of the special purpose depository institution, in connection
24
with an application for a charter, examination, report or other document filed with the
25
superintendent, knowingly made a false statement, material misrepresentation or material omission
26
to the superintendent or the duly authorized agent of the superintendent.
27

(ee) If the charter of a special purpose depository institution is surrendered, suspended or
28
revoked, the institution shall continue to be subject to the provisions of this chapter during any
29
liquidation or conservatorship.
30

(ff)(1) If the superintendent finds that a special purpose depository institution has failed or
31
is operating in an unsafe or unsound condition, as defined in this section, that has not been remedied
32
within the time prescribed under chapter 4 of title 19 or an order of the superintendent, the
33
superintendent shall conduct a liquidation or appoint a conservator pursuant to chapters 11 or 12 of
34
title 19;

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1

(2) As used in this section:
2

(i) "Failed" or "failure" means, consistent with rules adopted by the superintendent, a
3
circumstance when a special purpose depository institution has not:
4

(A) Complied with the requirements of this chapter;
5

(B) Maintained a contingency account, as required by this section; or
6

(C) Paid, in the manner commonly accepted by business practices, its legal obligations to
7
depositors on demand or to discharge any certificates of deposit, promissory notes or other
8
indebtedness when due.
9

(ii) "Unsafe or unsound condition" means, consistent with rules adopted by the
10
superintendent, a circumstance relating to a special purpose depository institution which is likely
11
to:
12

(A) Cause the failure of the institution as defined in this subsection;
13

(B) Cause a substantial dissipation of assets or earnings:
14

(C) Substantially disrupt the services provided by the institution to depositors; or
15

(D) Otherwise substantially prejudice the depository interests of depositors.
16

(gg)(1) A special purpose depository institution may voluntarily dissolve in accordance
17
with the provisions of this section. Voluntary dissolution shall be accomplished by either
18
liquidating the special purpose depository institution or reorganizing the institution into an
19
appropriate business entity that does not engage in any activity authorized only for a special purpose
20
depository institution. Upon complete liquidation or completion of the reorganization, the
21
superintendent shall revoke the charter of the special purpose depository institution and afterward,
22
the company shall not use the word "special purpose depository institution" or "bank" in its business
23
name or in connection with its ongoing business.
24

(2) The special purpose depository institution may dissolve its charter either by liquidation
25
or reorganization. The board of directors shall file an application for dissolution with the
26
superintendent, accompanied by a filing fee established by rule of the superintendent. The
27
application shall include a comprehensive plan for dissolution setting forth the proposed disposition
28
of all assets and liabilities, in reasonable detail to effect a liquidation or reorganization, and any
29
other plans required by the superintendent. The plan of dissolution shall provide for the discharge
30
or assumption of all of the known and unknown claims and liabilities of the special purpose
31
depository institution. Additionally, the application for dissolution shall include other evidence,
32
certifications, affidavits, documents or information as the superintendent may require, including a
33
demonstration of how assets and liabilities will be disposed, the timetable for effecting disposition
34
of the assets and liabilities and a proposal of the special purpose depository institution for

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1
addressing any claims that are asserted after dissolution has been completed. The superintendent
2
shall examine the application for compliance with this section, the business entity laws applicable
3
to the required type of dissolution and applicable rules. The superintendent may conduct a special
4
examination of the special purpose depository institution consistent with chapter 4 of title 19 and
5
the guidelines set forth in this chapter for purposes of evaluating the application.
6

(3) If the superintendent finds that the application is incomplete, the superintendent shall
7
return it for completion not later than sixty (60) days after it is filed. If the application is found to
8
be complete by the superintendent, the superintendent shall approve or disapprove the application
9
not later than thirty (30) days after it is filed. If the superintendent approves the application the
10
special purpose depository institution may proceed with the dissolution pursuant to the plan
11
outlined in the application subject to any further conditions the superintendent may prescribe. If
12
the special purpose depository institution subsequently determines that the plan of dissolution needs
13
to be amended to complete the dissolution, it shall file an amended plan with the superintendent
14
and obtain approval to proceed under the amended plan. If the superintendent does not approve the
15
application or amended plan, the special purpose depository institution may appeal the decision to
16
the superintendent pursuant to chapter 35 of title 42 ("administrative procedures").
17

(4) Upon completion of all actions required under the plan of dissolution and satisfaction
18
of all conditions prescribed by the superintendent, the special purpose depository institution shall
19
submit a written report of its actions to the superintendent. The report shall contain a certification
20
made under oath that the report is true and correct. Following receipt of the report, the
21
superintendent, no later than sixty (60) days after the filing of the report, shall examine the special
22
purpose depository institution to determine whether the superintendent is satisfied that all required
23
actions have been taken in accordance with the plan of dissolution and any conditions prescribed
24
by the superintendent. If all requirements and conditions have been met, the superintendent shall,
25
within thirty (30) days of the examination, notify the special purpose depository institution in
26
writing that the dissolution has been completed and issue a certificate of dissolution.
27

(5) Upon receiving a certificate of dissolution, the special purpose depository institution
28
shall surrender its charter to the superintendent. The special purpose depository institution shall
29
then file articles of dissolution and other documents required by § 7-1.2-1309. In the case of
30
reorganization, the special purpose depository institution shall file the documents required by the
31
secretary of state to finalize the reorganization.
32

(6) If the superintendent determines that all required actions under the plan for dissolution,
33
or as otherwise required by the superintendent, have not been completed the superintendent shall
34
notify the special purpose depository institution not later than thirty (30) days after this

LC004333 - Page 26 of 28
1
determination, in writing what additional actions shall be taken in order for the institution to be
2
eligible for a certificate of dissolution. The superintendent shall establish a reasonable deadline for
3
the submission of evidence that additional actions have been taken and the superintendent may
4
extend any deadline upon good cause. If the special purpose depository institution fails to file a
5
supplemental report showing that the additional actions have been taken before the deadline, or
6
submits a report that is found not to be satisfactory by the superintendent, the superintendent shall
7
notify the special purpose depository institution in writing that its voluntary dissolution is not
8
approved, and the institution may appeal the decision to the board pursuant to chapter 35 of title 42
9
("administrative procedures").
10

(hh) If a special purpose depository institution fails to submit any report required by this
11
chapter or by rule within the prescribed period, the superintendent may impose and collect a fee of
12
up to one thousand dollars ($1,000) for each day the report is overdue, as established by rule.
13

(ii) Each officer, director, employee or agent of a special purpose depository institution,
14
following written notice from the superintendent is subject to removal upon order of the
15
superintendent if they knowingly or willfully fail to perform any duty required by this chapter or
16
other applicable law or conform to any rule or order of the superintendent.
17

42-64.35-6. Severability in a pari material construction with other chapters.
18

(a) Except as provided in subsection (b) of this section, if any provision of this chapter or
19
the application of this chapter to any person or circumstances is held invalid or unconstitutional,
20
the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter
21
that can be given effect without the invalid or unconstitutional provision or application, and to this
22
end the provisions of this chapter are declared to be severable.
23

(b) The provisions of this chapter 64.35 of title 42 ("this chapter") shall be interpreted to
24
be in pari material with, consistent with, and harmonized with the provisions of chapter 56 of title
25
6 ("uniform supplemental commercial law for the uniform regulation of virtual-currency businesses
26
act"), chapter 14 of title 19 ("licensed activities"), and chapter 14.3 of title 19 ("currency
27
transmissions"). To the extent any provision of this chapter 64.35 of title 42 is determined to be
28
inconsistent with and cannot be harmonized with the provisions of any of the aforesaid chapters,
29
the provisions of chapter 56 of title 6, chapter 14 of title 19, and chapter 14.3 of title 19 shall control
30
and prevail over the provisions of this chapter.
31
SECTION 3. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND ECONOMIC
GROWTH BLOCKCHAIN ACT
***
1
This act would establish an economic growth blockchain and would regulate virtual and
2
digital assets, and establish depository banks for these purposes. This act would also establish a
3
technology advisory council, and a "financial sandbox" where regulatory requirements may be
4
waived.
5
This act would take effect upon passage.
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