For the protections part: it means creating a legal framework in which white hats can ethically test systems without companies having a responsible disclosure program. The problem with responsible disclosure programs is that the companies with the worst security don't give a shit and won't have such a program. They may even threaten such Good Samaritans for reporting issues in good faith, there have been many such cases.
For the rewards part: again, the companies who don't have a shit won't incentivise white hat pentesting. If a company has a security hole that leads to disclosure of sensitive information, it should be fined, and such fines can be used for rewards.
This creates an actual market for penetration testing that includes more than just the handful of big tech companies willing to participate. It also puts companies legally on the hook for issues before a security disaster occurs, not after it's already happened.