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SD 3276

An Act establishing the Massachusetts Digital Settlement Sandbox Program

194th Legislature (2025-2026) Introduced by Peter Durant

Massachusetts creates a 24-month digital settlement sandbox to test GENIUS-compliant stablecoins for public and private settlements, with oversight, disclosures, and incentives.

Referred to the committee on Financial Services
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Bill Summary · SD 3276

Summary of Senate Bill SD 3276: An Act establishing the Massachusetts Digital Settlement Sandbox Program

Purpose and goal

  • Create a Massachusetts digital settlement sandbox to test and oversight the use of GENIUS-compliant stablecoins for public and private sector settlement applications.
  • Aims to enable controlled experimentation with digital settlement tools (e.g., stablecoins) while ensuring compliance with state and federal laws, consumer protection, and financial regulation.

Key provisions and changes

Definitions (Section 25)

  • “Division”: Massachusetts Division of Banks.
  • “GENIUS-compliant stablecoin”: a payment stablecoin issued by a permitted issuer under the GENIUS Act and federally supervised.
  • “Sandbox participant”: a firm, financial institution, governmental entity, or nonprofit admitted into the program.
  • “Settlement application”: includes same-day closing of municipal notes/bonds, payroll or contractor disbursements, government refunds or rebates, and cross-border remittances linked to public universities or health systems.

Establishment and scope

  • The Division shall establish the Massachusetts digital settlement sandbox, with regulations for application, admission, and oversight.
  • Participation is limited to 24 months, with a possible one-time 12-month extension for good cause.

Regulatory coordination

  • Division to coordinate with federal regulators to ensure GENIUS Act compliance, Bank Secrecy Act/AML, sanctions, cybersecurity, and operational risk standards.
  • Information-sharing agreements with OCC, Federal Reserve, and other agencies; act not to conflict with federal law.

Consumer protection and transparency

  • Sandbox participants must disclose GENIUS-compliant status, 1:1 reserve backing, and any transaction/conversion fees to consumers and counterparties.
  • The Division may suspend or revoke participation for noncompliance.

Sandbox Incentive Fund

  • An incentive fund within the Executive Office of Economic Development to support participants via refundable payroll/RESEARCH tax credits or competitive pilot-grant funding.
  • Annual cap: $15,000,000 (credits and grants combined).
  • Funding sources: 1) One-time seed of $3,000,000 reallocated from existing appropriations. 2) Application/participation fees up to $50,000 per participant. 3) A 0.2% transaction fee on stablecoin transactions within the sandbox (remitted quarterly). 4) Federal grants via matching programs (e.g., EDA, Treasury). 5) Contributions from public-private partnerships, philanthropies, or venture capital (publicly disclosed).

Reporting

  • Annual report to legislative clerks and key committees detailing participants, pilot use cases, economic/fiscal impacts, contributions, and recommendations for permanent changes.

Sunset and severability

  • Act expires 5 years after effective date unless reauthorized; participants may complete existing pilots.
  • Provisions include standard severability.

Effective date

  • Takes effect 90 days after passage.

Who would be affected

  • Sandbox participants: firms, financial institutions, government entities, and nonprofits piloting digital settlement tools.
  • Consumers and counterparties engaging in sandbox transactions with GENIUS-compliant stablecoins.
  • State agencies and regulators overseeing compliance, reporting, and wind-down procedures.

Timeline and procedural notes

  • Introduced and referred to Financial Services; Rules suspended and referred to Financial Services in November 2025.
  • Effective date contingent on passage; sunset clause applies five years post-enactment.

Compiled from official sources — confirm details with the bill’s official record.

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