Neither has yet moved beyond early stages in the Legislature: Assembly Bill 2004 is a placeholder bill currently focused on the California Financial Literacy Fund — but awaiting direction from the state Blockchain Working Group. AB 2150, the Money Transmission Act, takes aim at virtual currency. It would prohibit residents from “engaging in the business of money transmission” without a license from the Department of Business Oversight — and make doing so without a license a felony. It would define “issuing, transferring, or storing a virtual currency, as defined, on behalf of a consumer” as money transmission. And by expanding the scope of unlicensed money transmission, it would create “a state-mandated local program.” It was referred on Feb. 20 to the Assembly Committee on Banking and Finance. Among the takeaways:
• AB 2004, the Whittier Democrat said, will be a “vehicle for the working group," which he said is still considering many issues including a definition of blockchain. The expectation, he said, is to take aspects of the group’s findings — some or many potentially coming from its report to the Legislature due July 1 — and remake the bill, which could then become law as soon as Jan. 1, 2021. The placeholder enables the possibility of legislative action on blockchain this session, Calderon said — voicing concerns the resulting law could be too broad in its application and create confusion or stifle business.
“There are still a lot of question marks in terms of what goes into the bill, what the definition is going to look like. We just don’t know what the future of blockchain is going to look like, and so we don’t want to limit ourselves by being too prescriptive with the language and how we choose to define it in statute,” he told Techwire. “And whether we call it blockchain, if we call it a digital ledger.”
• The Assemblymember said he’s meeting with stakeholders, including DBO Commissioner Manuel P. Alvarez, on the matter of cryptocurrency regulation, recognizing that AB 2150 could offer governments and tech companies that utilize virtual currency more legitimacy, consistency and clarity on what to expect from regulatory agencies. A DBO representative confirmed to Techwire via email that the agency is “providing technical assistance” to Calderon on AB 2150.
• The DBO itself could face changes with likely relevance to financial technology under Gov. Gavin Newsom’s proposed Fiscal Year 2020-2021 state budget, released Jan. 10. Newsom proposes renaming the agency July 1 to the Department of Financial Protection and Innovation. Leaning on consumer financial protection, the governor earmarks $10.2 million and 44 positions specifically for a Financial Protection Fund — with those numbers rising to $19.3 million and 90 positions in FY 2022-23. A part of that would help fund and support a new Financial Technology Innovation Office — which Calderon said he thinks is “largely geared” toward fintech, but could also consider blockchain and cryptocurrency.
• Calderon said he’s “encouraged that the governor is taking an interest in this area” and praised Alvarez and the DBO as well-suited to implement these types of regulations. A DBO representative said: “We would expect the new Office of Innovation [part of the governor’s budget proposal] to look into cutting edge issues like virtual currency,” and described it as “independent of and irrespective” of AB 2150.
