Bill Text: CA AB1934 | 2023-2024 | Regular Session | Amended
Bill Title: Digital financial asset businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-05-23 - From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.I. [AB1934 Detail]
Download: California-2023-AB1934-Amended.html
|
Amended
IN
Senate
May 23, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 1934
| Introduced by Assembly Member Grayson |
January 25, 2024 |
An act to amend Sections 3303 and 3603 3201, 3303, 3509, 3603, 3605, and 3907 of the Financial Code, relating to financial regulation.
LEGISLATIVE COUNSEL'S DIGEST
AB 1934, as amended, Grayson.
Digital financial asset businesses.
Existing law, the Digital Financial Assets Law, prohibits prohibits, on or after July 1, 2025, a person from engaging in digital financial asset business activity, or holding itself out as being able to engage in digital financial asset business activity, with, or on behalf of, a resident, unless any of certain criteria are met, including that the person is licensed with the Department of Financial Protection and Innovation, as prescribed. Existing
prescribed, or the person submits an application on or before July 1, 2025, and is awaiting approval or denial of that application. Existing law defines “digital financial asset” for these purposes to mean a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender, except as specified. Existing law also defines “covered person” to mean a person required to obtain a license under the Digital Financial Assets Law. these provisions.
This
bill would extend the July 1, 2025, dates to July 1, 2026.
Existing law requires a licensee to maintain, for all digital financial asset business activity with, or on behalf of, a resident for 5 years after the date of the activity, certain records, including a general ledger maintained at least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee.
This bill would require a licensee to also maintain, if applicable, a report maintained at least monthly that demonstrates compliance with conditions that authorize the licensee to exchange, transfer, or store a digital financial asset or engage in digital financial asset administration, as specified.
Existing law requires, on or after July 1, 2025, a covered person to make certain disclosures
for the protection of residents, as prescribed, and to maintain in its control an amount of each type of digital financial asset sufficient to satisfy the aggregate entitlements of the persons to the type of digital financial asset, as prescribed.
This bill would extend the July 1, 2025, date to July 1, 2026.
Existing law prohibits generally regulates, on or after July 1, 2025, the provision of stablecoins, as prescribed, including by prohibiting a covered person from exchanging, transferring, or storing a digital financial asset that is a stablecoin or engaging in digital financial asset administration
of a stablecoin, as specified, unless certain conditions are met.
This bill would extend the July 1, 2025, date to July 1, 2026, and would specify that a covered person may exchange, transfer, or store a stablecoin or engage in digital financial asset administration of that stablecoin, as specified, if the stablecoin is approved by the commissioner and complies with certain requirements, restrictions, or prohibitions established by the commissioner.
Existing law requires, on or after July 1, 2025, an operator of a digital financial asset transaction kiosk that does not itself engage in digital financial asset business activity to ensure that the person engaging in digital financial asset business activity via the digital financial asset
transaction kiosk has a license pursuant to these provisions.
This bill would extend the July 1, 2025, date to July 1, 2026.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 3201 of the Financial Code is amended to read:3201.
On or after July 1,(a) The person is licensed in this state by the department under Section 3203.
(b) The person submits an application on or before July 1, 2025,
2026, and is awaiting approval or denial of that application.
(c) The person is exempt from licensure under this division pursuant to Section 3103.
SECTION 1.SEC. 2.
Section 3303 of the Financial Code is amended to read:3303.
(a) A licensee shall maintain, for all digital financial asset business activity with, or on behalf of, a resident for five years after the date of the activity, a record of all of the following:(1) Any transaction of the licensee with, or on behalf of, the resident or for the licensee’s account in this state, including all of the following:
(A) The identity of the resident.
(B) The form of the transaction.
(C) The amount, date, and payment instructions given by the resident.
(D) The account number, name, and United States Postal Service mailing address of the resident, and, to the extent feasible, other parties to the transaction.
(2) The aggregate number of transactions and aggregate value of transactions by the licensee with, or on behalf of, the resident and for the licensee’s account in this state expressed in United States dollar equivalent of digital financial assets for the previous 12 calendar months.
(3) Any transaction in which the licensee exchanged one form of digital financial asset for legal tender or another form of digital financial asset with, or on behalf of, the resident.
(4) A general ledger maintained at
least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee.
(5) Any business call report the licensee is required to create or provide to the department.
(6) Bank statements and bank reconciliation records for the licensee and the name, account number, and United States Postal Service mailing address of any bank the licensee uses in the conduct of its digital financial asset business activity with, or on behalf of, the resident.
(7) A report of any dispute with the resident.
(8) If applicable, a report maintained at least monthly that demonstrates compliance with Section 3601.
(b) A licensee shall maintain records required by subdivision (a) in a form that enables the department to determine whether the licensee is in compliance with this division, any court order, and the laws of this state.
(c) If a licensee maintains records outside this state that pertain to transactions with, or on behalf of, a resident, the licensee shall make the records available to the department not later than three days after request, or, on a determination by the department, at a later time.
(d) All records maintained by a licensee are subject to inspection by the department.
SEC. 3.
Section 3509 of the Financial Code is amended to read:3509.
The requirements imposed on a covered person or a covered exchange under this chapter shall be operative on July 1,SEC. 2.SEC. 4.
Section 3603 of the Financial Code is amended to read:3603.
(a) Notwithstanding subdivision (a) of Section 3601, a covered person may exchange, transfer, or store a stablecoin or engage in digital financial asset administration of that stablecoin, whether directly or through an agreement with a digital financial asset control services vendor, if that stablecoin is approved by the commissioner pursuant to subdivision (b), provided that the covered person complies with any requirements, restrictions, or prohibitions established by the commissioner pursuant to subdivision (c).(b) (1) The commissioner may approve a stablecoin for exchange, transfer, or storage by a covered person, or for issuance pursuant to digital financial asset administration, if the commissioner determines that the stablecoin does not compromise the interests of residents who may use the stablecoin as a payment for goods and services or as a store of value.
(2) In determining whether to make an approval under paragraph (1), the
commissioner shall consider all of the following factors:
(A) Any legally enforceable rights provided by the issuer of the stablecoin to holders of the stablecoin, including, but not limited to, rights to redeem the stablecoin for legal tender or bank or credit union credit.
(B) The amount, nature, and quality of assets owned or held by the issuer of the stablecoin that may be used to fund any redemption requests from residents.
(C) Any risks related to how the assets described in subparagraph (B) are owned or held by the issuer that may impair the ability of the issuer of the stablecoin to meet any redemption requests from residents.
(D) Any representations made by
the issuer of the stablecoin related to the potential uses of the stablecoin.
(E) Any representations made by the issuer of the stablecoin related to the risks of using the stablecoin as payment for goods or services or as a store of value.
(F) Any other factors the commissioner deems material to making their determination.
(c) (1) As a condition of providing an approval pursuant to subdivision (b), the commissioner may require the stablecoin issuer to obtain a license under Section 3203 and may impose additional requirements, restrictions, or prohibitions on the activities of the issuer of the stablecoin in order to protect the interests of residents who may use the stablecoin as payment for goods or
services or as a store of value.
(2) The commissioner may impose additional requirements, restrictions, or prohibitions on the activities of a covered person exchanging, transferring, or storing an approved stablecoin or engaging in digital financial asset administration of an approved stablecoin, whether directly or through an agreement with a digital financial asset control services vendor, in order to protect the interests of residents who may use the stablecoin as a payment for goods or services or as a store of value.
(d) (1) The commissioner shall revoke an approval under subdivision (b) if, after notice and reasonable opportunity to be heard, the commissioner determines that the issuer of the stablecoin markets the stablecoin in a manner that may
create a reasonable expectation or belief among the general public that the stablecoin poses no more risk to a holder or user of the stablecoin than the risks posed to the holder or user of bank credit or a stored value product issued by a person licensed pursuant to Division 1.2.
(2) The commissioner may revoke an approval under subdivision (b) if, after notice and reasonable opportunity to be heard, the commissioner makes any of the following determinations:
(A) Changes in the activities of the covered person or the issuer of the stablecoin relative to the commissioner’s understanding of those activities when the commissioner made the approval may compromise the interests of residents who use or hold the stablecoin.
(B) Changes in market conditions within the financial system or within markets for digital financial assets relative to the commissioner’s understanding of the financial system or the markets when the commissioner made the approval may compromise the interests of residents who use or hold the stablecoin.
(C) The covered person or the issuer violates any requirement, restriction, or prohibition imposed by the commissioner pursuant to subdivision (c) or any other provision, requirement, rule, or
regulation under this chapter.
(e) If the commissioner approves a stablecoin pursuant to this section, the commissioner shall make available on the department’s internet website the approval.
SEC. 5.
Section 3605 of the Financial Code is amended to read:3605.
The requirements imposed by this chapter shall be operative on July 1,SEC. 6.
Section 3907 of the Financial Code is amended to read:3907.
(a) On or after July 1,(b) If an operator does not engage in digital financial asset business activity but allows or facilitates another person to engage in digital financial asset business activity via a digital financial asset transaction kiosk that is owned, operated, or managed by the operator, the operator shall do all of the following:
(1) On or after July 1, 2025,
2026, ensure that the person engaging in digital financial asset business activity via the digital financial asset transaction kiosk has a license pursuant to this division.
(2) Ensure that any charges collected from a customer, whether collected by the operator, a person engaging in digital financial asset business activity via the digital financial asset transaction kiosk, or both, comply with the limits provided by Section 3904.
(3) Comply with all other provisions of this chapter.
