Bill SD.3276

SENATE DOCKET, NO. 3276 FILED ON: 10/8/2025

SENATE . . . . . . . . . . . . . . No.

By Mr. Durant, a petition (accompanied by bill) (subject to Joint Rule 12) of Peter J. Durant for legislation to establish the Massachusetts Digital Settlement Sandbox Program. Financial Services.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Fourth General Court
(2025-2026)

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An Act establishing the Massachusetts Digital Settlement Sandbox Program.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 167B, as appearing in the 2022 Official Edition, is hereby amended by inserting the following new section:-

Section 25:

(a) Definitions

As used in this act, the following words have the following meanings:

“Division”, the Massachusetts division of banks.

“GENIUS-compliant stablecoin”, a payment stablecoin issued by a permitted payment stablecoin issuer as defined under the GENIUS Act and subject to federal supervision under that act.

“Sandbox participant”, a firm, financial institution, governmental entity, or nonprofit organization admitted into the Massachusetts digital settlement sandbox under this act.

“Settlement application” includes, but is not limited to: (1) same-day closing of municipal notes and bonds; (2) payroll or contractor disbursements; (3) government refunds or rebates; and (4) cross-border remittances associated with public universities or health systems.

(b) Establishment of Sandbox

The division shall establish a Massachusetts digital settlement sandbox program, consistent with chapter 167B and chapter 169 of the General Laws. The division, in consultation with the office of the state treasurer, the secretary of administration and finance, and the Massachusetts technology collaborative, shall promulgate regulations for the application, admission, and oversight of sandbox participants. Sandbox participation shall be limited to 24 months, with a possible one-time 12-month extension upon a showing of good cause.

The division shall coordinate with federal banking regulators and the United States Department of the Treasury to ensure compliance with the GENIUS Act, the Bank Secrecy Act, anti-money laundering obligations, sanctions requirements, and cybersecurity and operational risk management standards. The division shall establish information-sharing agreements with the office of the comptroller of the currency, the federal reserve, and other relevant agencies for sandbox participants operating in the commonwealth. Nothing in this act shall be construed to conflict with federal law or regulations.

(d) Consumer Protection and Transparency

Sandbox participants shall provide clear disclosures to consumers and counterparties, including: (1) the GENIUS-compliant status of the stablecoin used; (2) the 1:1 reserve requirements and backing assets; and (3) any transaction or conversion fees. The division may suspend or revoke sandbox participation for failure to comply with disclosure, prudential, or anti-fraud requirements.

(e) Sandbox Incentive Fund

A sandbox incentive fund is established within the executive office of economic development. The fund shall support sandbox participants through refundable tax credits for qualifying payroll and research expenditures in the commonwealth or competitive grants for pilot projects involving settlement applications. The aggregate annual amount of credits and grants shall not exceed $15,000,000. The fund shall be financed through:

(1) A one-time seed allocation of $3,000,000, reallocated from existing appropriations to the economic development incentive program under section 3A of chapter 23A of the General Laws or the Massachusetts technology collaborative under section 2 of chapter 40J of the General Laws, as determined by the secretary of economic development;

(2) Application and participation fees for sandbox participants, not to exceed $50,000 per participant, as established by regulations promulgated by the division;

(3) A transaction fee of 0.2 per cent on the value of stablecoin transactions processed within the sandbox, collected by participants and remitted to the fund quarterly, subject to regulations ensuring compliance with chapter 167B and chapter 169 of the General Laws and federal law, and avoiding duplicative assessments;

(4) Federal grants obtained through matching programs, including those administered by the United States Economic Development Administration or United States Department of the Treasury, with the division authorized to apply for and accept such funds;

(5) Contributions from public-private partnerships, philanthropic organizations, or venture capital entities, solicited and accepted by the division in consultation with the executive office of economic development, provided that such contributions align with the purposes of this act and do not create conflicts of interest. Contributions shall be disclosed publicly in the annual report, including source, amount, and any conditions.

The division shall promulgate regulations for the administration of the fund, including fee structures, disbursement criteria, and reporting on fund sources and uses to ensure transparency and fiscal responsibility.

(f) Reporting

The division shall submit an annual report to the clerks of the house of representatives and senate, the joint committee on financial services, and the house and senate committees on ways and means. The report shall detail: (1) the number and nature of sandbox participants; (2) pilot use cases tested; (3) economic and fiscal impacts on the commonwealth; (4) contributions received under section 6, subsection (e); and (5) recommendations for permanent statutory or regulatory changes.

(g) Sunset

This act shall expire 5 years after its effective date unless reauthorized by the general court; provided, however, that sandbox participants admitted before the expiration date may complete their pilot periods. The division shall ensure an orderly wind-down of sandbox activities to protect consumers and counterparties.

(h) Severability

If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances shall not be affected.

(i) Effective Date

This act shall take effect 90 days after its passage.

Name:	District/Address:
Peter J. Durant	Worcester and Hampshire