Reduce paperwork with a regulatory sandbox
During my tenure, I have heard business owners and community members rightly complain about government bureaucracy and over-regulation. Their common concern is clear: innovation moves fast, but government regulations are behind the times. As a result, the vanguard of private sector innovation often goes beyond the scope of what government rules were meant to regulate.
When it’s unclear how old rules apply to new innovations, contractors and regulators are too often pitted against each other in ways that hurt Missouri. Fortunately, there is a new policy solution to overcome this obstacle called the regulatory sandbox. A regulatory sandbox provides a more flexible regulatory framework for new innovations by allowing innovators and regulators to work cooperatively to safely bring new products and services to consumers.
Our state should adopt a regulatory sandbox to attract job creators and advance our business-friendly reputation. That’s why I introduced HB 2587, which would allow companies to test new products or services under the watchful eye of regulators working to protect the safety of Missourians.
While well-designed regulations maintain worker and business productivity and consumer safety, old regulations can become obsolete or be exploited by established businesses to stifle new competition. Excessive and outdated government bureaucracy prevents individuals from living their dreams and creating opportunities and products that will benefit everyone. When an innovative product or service is created, it may fall under a regulatory regime that was not designed to manage it.
For example, Uber and Lyft operated in a regulatory gray area when they launched. They were only able to survive and thrive because they grew rapidly and were popular with consumers. Missouri policymakers welcomed Uber and Lyft in part because they quickly became so big. However, not all innovators grow so quickly and many need a flexible regulatory framework in which to prove their business models.
Imagine a Missouri entrepreneur building a financial services company that leverages emerging blockchain technology. He has the potential to hire Missouri workers and provide a valuable service to local consumers, but he doesn’t know if his business model is legal under state financial regulations (many of which were written decades before). technology makes blockchain possible). Under the system established by HB 2587, this entrepreneur could apply for access to the sandbox and be granted exemption from certain regulations if their application is successful, giving the idea an opportunity to grow. Health and safety regulations would still apply, but the entrepreneur might be relieved of anachronistic regulations that were simply not designed with new business models in mind.
Last year, Utah became the first state to create a regulatory sandbox that works across industries, and other states have experimented with industry-specific sandboxes. Florida, Hawaii, Nevada, West Virginia, and Wyoming have fintech sandboxes; and Kentucky, South Dakota, Vermont and West Virginia have created insurance sandboxes. While finance and insurance are heavily regulated, a sandbox available across industries will help Missouri grow its manufacturing sector, improve health care outcomes, and potentially even expand access to legal services, to cite just a few examples.
Acting quickly and following Utah’s lead will give Missouri an edge over neighboring states with a new way to foster job creation. Innovators build their businesses where they know they will be treated fairly, and a regulatory sandbox is one way to give new business models a fair chance to grow.
A regulatory sandbox can’t solve every challenge for the business community, but it’s a valuable tool for fostering innovation and giving small entrepreneurs a fair chance at success in the Show-Me State. That’s why, in addition to cutting red tape, I’m pushing the Missouri government to lead the region and bolster its already strong reputation as an innovation-friendly state with a regulatory sandbox.
Representative Alex Riley is a Republican who represents HD 134 in Greene County and serves as vice chairman of the General Laws Committee.