California is back at it; a new (old) virtual currency licensing bill is pending in the Assembly.
We believe that the ULC’s model Regulation of Virtual Currency Businesses Act will offer a better way.
The new bill is AB 1123. Over the last two years we’ve been discussing and studying an earlier bill, AB 1326, extensively. That bill went through several iterations: one that was carbon copy of an early N.Y. BitLicense draft, another that was markedly improved with our suggested changes, and finally one that regressed back to an overly broad and potentially innovation-crushing registration regime (that we opposed).
With a new legislative session comes a new bill. This new version has some of the elements we fought for over the last few years. In substance it most nearly resembles the version of AB 1326 that we supported rather than the original or final versions that we opposed. That said, we’re not yet ready to get behind the new bill.
Innovators in California are badly in need of regulatory certainty because the state’s Department of Business Oversight has continually refused to grant virtual currency firms money transmission license or, in the alternative, clearly state that virtual currency firms free from an obligation to get licensed. That has made it impossible to be either fully compliant or fully safe from the crushing criminal penalties of non-compliance.
This bill would remove some of that dangerous uncertainty in California. But clarity in California is only part of the larger goal we should seek: regulatory clarity across all of the states. Our best hope for that outcome right now is getting the Uniform Law Commission’s model Regulation of Virtual Currency Businesses Act passed into law by as many states as possible. We’d prefer California hold-off for the remaining three months until the ULC finalizes and release that model act, and then pass that model act. It is legislative language that has been developed carefully and deliberately over the course of almost two years by top legal as well technical experts in the field. We’ve been fortunate to work very closely with the commissioners and are thrilled with the current draft. Bottom line: It’s a better bill. Enacting the ULC model act instead of AB 1123 would be better for consumers and innovators, and would also make California a leader in promoting uniformity and innovation amongst the states. We’ll be working with our friends in California diligently to hopefully get to that outcome.