Money Transmitter Licenses: Do you need one for your Bitcoin Business?
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Existing law, the California Credit Union Law, defines and regulates the formation, management, and bitcoin money transmitter license california of credit unions to the extent not preempted by federal law. The law defines credit union for these purposes. This bill would make a nonsubstantive change in the definition of credit unions.
No corporation, social purpose corporation, association, or individual shall issue or put in circulation, as money, anything but the lawful money of the United States. However, the commissioner may require the licensee to increase its surety bond or eligible securities amounts in an amount necessary to ensure the consumer protection of the additional business.
The commissioner may also place, as a condition on the authorization to engage in any virtual currency business pursuant to Division 11 commencing with Sectionany condition authorized by Section For purposes of this division, the following definitions shall apply: For the purposes of carrying out the provisions of this division, the commissioner may adopt regulations pursuant to the Administrative Procedure Act Chapter 3.
This division shall be known and may be cited as the Virtual Currency Act. A person shall not engage in any virtual currency business in this bitcoin money transmitter license california unless the person is licensed or exempt from licensure under this division.
The following are exempt from the licensing requirement described in Section The application shall state or contain all of the following: An applicant for licensure and approval shall comply with subdivision b. No fee for filing an application shall be refundable, regardless of whether the application is approved, denied, or withdrawn. In determining the minimum amount of capital that must be maintained by a licensee, the commissioner bitcoin money transmitter license california consider a variety of factors, including, but not limited to: The commissioner may consult and cooperate with other state or federal regulators in enforcing and administering this division.
They may jointly pursue examinations and take other official action bitcoin money transmitter license california they are otherwise empowered to take.
A licensee shall file a report with the commissioner within five business days after the licensee has reason to know of the occurrence any of the following events: A licensee shall maintain any records as required by the commissioner for determining its compliance with this division for at least three years.
Any licensee may surrender its license by filing with the commissioner the license and a report with any information as the commissioner requires. The voluntary surrender of the license shall become effective at the time and upon the conditions as the commissioner specifies by order. The commissioner may, at his or her discretion or upon request by an applicant or licensee, redact proprietary or other confidential information regarding an applicant or licensee from any decision, letter, or other written guidance issued in connection with an applicant or licensee.
The commissioner may offer informal guidance to any prospective applicant for a license under this division, regarding the conditions of licensure that may be applied to that person. The commissioner shall inform any applicant that requests that guidance of the licensing requirements that will bitcoin money transmitter license california required of that applicant, based on the information provided by the applicant concerning its plan to conduct business under this division, and the factors used to make that determination.
At any time, if the commissioner deems it necessary for the general welfare of the public, he bitcoin money transmitter license california she may exercise any power set forth in this division with respect to a virtual currency business, regardless of whether an application for a license has been filed with the commissioner, a license has been issued, or, if issued, the license has been surrendered, suspended, or revoked.
The order shall require the licensee to show cause before the commissioner, at a time and place to be fixed by the commissioner, as to why the order should not be observed. A licensee shall comply with the final order unless, within 10 days after the issuance of the order, its enforcement is restrained in a proceeding bitcoin money transmitter license california by the licensee.
The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination bitcoin money transmitter license california the facts upon the merits, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to the licensee.
Otherwise, the suspension or revocation shall be deemed rescinded. The enforcement provisions of this division are in addition to any other enforcement powers that the commissioner may have under law.
If the certificate or opinion is qualified, bitcoin money transmitter license california commissioner may order the licensee to take any action as the commissioner may find necessary to enable the independent or certified public accountant or independent public accountant to remove the qualification. The verification shall state that each of the officers bitcoin money transmitter license california the verification has a personal knowledge of the matters in the report and that each of them believes that each statement in the report is true.
A licensee shall disclose to consumers the following disclosure in a form and manner prescribed by the commissioner: A transaction is not bitcoin money transmitter license california while it is in a pending state. Virtual currency associated with transactions that are in a pending state will be designated accordingly, and will not be included in your bitcoin money transmitter license california balance or be available to conduct transactions.
The risk of loss in trading or holding virtual currency can be substantial. You should therefore carefully consider whether trading or holding virtual currency is suitable for you in light of your financial condition.
In considering whether to trade or hold virtual currency, you should be aware that the price or value of virtual currency can change rapidly, decrease, and potentially even fall to zero. Insert company name is licensed by the Department of Business Oversight to do business in California. If you have complaints with respect to any aspect of the virtual currency business conducted by company nameyou may contact the California Department of Business Oversight at its toll-free telephone number,by email at consumer.
The commissioner may, by regulation or order, either unconditionally or upon specified terms and conditions or for specified periods, exempt from all or part of this division any person or transaction or class of persons or transactions, if the commissioner finds such action to be in the public interest and that the regulation of such persons or transactions is not necessary for the purposes of this division.
Notwithstanding any other law, a licensee in good standing under this division that plans to engage in activities permitted under the Money Transmission Act Division 1. A person or entity that receives such a license shall also register with FinCEN as a money services business, if applicable. Unless the bitcoin money transmitter license california otherwise removes the provisional status of or renews such license, a provisional license shall expire two years after the date of issuance.
This division shall become operative on July 1, A credit union is a cooperative, organized for the purposes of promoting thrift and savings among its members, creating a source of credit for them at rates of interest set by the board of directors, and providing an opportunity for them to use and control their money on a democratic basis in order to improve their economic and social conditions.
As a cooperative, a credit union conducts its business for the mutual benefit and general welfare of its members with the earnings, savings, benefits, or services of the credit union being distributed to its members as patrons. An act to amend Section of the Financial Code, relating to credit unions. An act to repeal Section of the Corporations Code, and to add Section to, and to add Division 11 commencing with Section to, the Financial Code, relating to currency.
ABas amended, Dababneh. Existing law, the Money Transmission Act, prohibits a person from engaging in the business of money transmission in this state, or advertising, soliciting, or holding itself out as providing money transmission in this bitcoin money transmitter license california, unless the person is licensed by the Commissioner of Business Oversight or exempt from licensure under the act. Existing law requires applicants for licensure to pay the commissioner a specified nonrefundable fee and to complete an application form requiring certain information.
As security, existing law requires each licensee to deposit and maintain on deposit with the Treasurer cash in an amount not less than, or securities having a market value not less than, such amount as the commissioner may find and order from time to time as necessary to secure the faithful performance of the obligations of the licensee with respect to money transmission in this state.
Existing law requires a licensee at all times to own eligible securities, as defined, in a specified aggregate amount not less than the amount of all of its outstanding money received for transmission, as specified. This bill would enact the Virtual Currency Act. The bill would prohibit a person from engaging in any virtual currency business, as defined, in this state unless the person is licensed by the Commissioner of Business Oversight or is exempt from the licensure requirement, as provided.
The bill would require applicants for licensure, including an applicant for licensure and approval to acquire control of a licensee, to pay the commissioner a specified nonrefundable application fee and complete an application form required to include, among other things, information about the applicant, prior virtual currency services provided by the applicant, a sample form of receipt for transactions involving the business of virtual currency, and specified bitcoin money transmitter license california statements.
The bill would make these licenses subject to annual renewal and would require a renewal fee paid to the commissioner in a specified amount. The bill would require licensees to annually pay the commissioner a specified amount for each licensee branch office.
This bill would require each licensee to maintain at all times such capital as the commissioner determines, subject to specified factors, is sufficient to ensure the safety and soundness of the licensee, its ongoing operations, and maintain consumer protection. The bill would require each licensee to bitcoin money transmitter license california a bond or trust account in United States dollars for the benefit of its consumers in the form and amount as specified by the commissioner.
This bill would authorize the commissioner to examine the business and any branch office of any licensee to ascertain whether the business is being conducted in a lawful manner and all virtual currency is properly accounted for. The bill would require a licensee to file a report with the commissioner bitcoin money transmitter license california a specified period of time after the licensee knows about the occurrence of certain events relating to the virtual currency business and those persons connected to that business, and to also maintain records as required by the commissioner for a specified period of time.
With regard to enforcement, among other things, this bill would, if it appears that a licensee is violating or failing to comply with these provisions or conducting business in an unsafe or injurious manner, authorize the commissioner to order bitcoin money transmitter license california licensee to comply or discontinue those practices. The bill would also authorize the commissioner to issue an order suspending or revoking a license, or placing a licensee in receivership, if after notice and an opportunity for a hearing, the commissioner makes a specified finding.
The bill would provide that every order, decision, or other official act of the commissioner is subject to review. This bill would authorize the commissioner to impose a civil penalty for a violation of these provisions. Within a specified period after the fiscal year, the bill would require a licensee to file with the commissioner a specified audit report.
This bill would require a licensee to provide a specified consumer protection disclosure and receipt to its consumers. This bill would authorize a virtual currency licensee in good standing that plans to engage in activities permitted under the Money Transmission Act to request that the commissioner convert his or her license into a license under the Money Transmission Act, as specified.
This bill would require a licensee, under the Money Transmission Act, to report to the commissioner its plan to engage in any virtual currency business and request permission to engage in that business subject to specified bitcoin money transmitter license california and conditions, as determined by the commissioner. This bill would make these provisions including the Virtual Currency Act operative on July 1, The people of the State of California do enact as follows: Section of the Corporations Code is repealed.
Section is added to the Financial Code, to read: Division 11 commencing with Section is added to the Financial Code, to read: For purposes of this division, the following definitions shall apply:. The application shall state or contain all of the following:.
In determining the minimum amount of capital that must be maintained by a licensee, the commissioner shall consider a variety of factors, including, but not limited to:. A licensee shall file a report with the commissioner within five business days after the licensee has reason to know of the occurrence any of the following events:.
A licensee shall disclose to consumers the following disclosure in a form and manner prescribed by the commissioner:. Introduced by Assembly Member Dababneh.