A California lawmaker has introduced a bill in the state assembly that would set guidelines on digital currencies such as Bitcoin, reported American Banker.
Assemblyman Matt Dababneh (D-Encino) has proposed AB 1326, a bill that would provide regulations for individuals or businesses that want to start using cryptocurrencies.
The proposed bill states that any applicant who wants to pursue using digital currency (noted in the bill as “virtual currency”) would have to pay $5,000 to the Commission of Business Oversight commissioner and provide basic information about his or her business and plans for digital currency, said American Banker.
The bill would also require each licensee to maintain enough capital should the commissioner find a problem with the licensee’s business operations to preserve consumer protection. To meet this capital requirement, applicants need to invest an aggregate amount equal to the value of the digital currency that the licensee has on deposit for its customers in only specified investments.
American Banker reported that currently, California’s Money Transmission Act bars someone from doing money transfer business unless they are licensed by the Commission of Business Oversight or are exempt from needing a license. This exemption list includes a merchant or consumer who uses digital currency solely for the purchase of sale or goods.
According to the California legislature, “virtual currency” is defined as any type of digital unit that is used as a means of exchange or a form of digitally stored value or that is incorporated into payment system technology. American Banker reported that these units can have a centralized repository or administrator, are decentralized without an administrator, or could be developed or obtained by computing or manufacturing effort.
Image: Public domain image by Devin Cook