Bill Text: CA AB1123 | 2017-2018 | Regular Session | Amended
Bill Title: Virtual currency: regulation.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2018-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1123 Detail]
Download: California-2017-AB1123-Amended.html
Amended
IN
Assembly
March 30, 2017 |
Assembly Bill | No. 1123 |
Introduced by Assembly Member Dababneh |
February 17, 2017 |
LEGISLATIVE COUNSEL'S DIGEST
Existing law, the California Credit Union Law, defines and regulates the formation, management, and dissolution 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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 107 of the Corporations Code is repealed.No corporation, social purpose corporation, association, or individual shall issue or put in circulation, as money, anything but the lawful money of the United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.
SEC. 2.
Section 2178 is added to the Financial Code, to read:2178.
(a) Notwithstanding any other law and consistent with subdivision (e) of Section 26004, a licensee shall report to the commissioner its plan to engage in any virtual currency business as described in Division 11 (commencing with Section 26000) and request, on a form provided by the commissioner, permission to engage in any virtual currency business without the issuance of a virtual currency license issued under Division 11 (commencing with Section 26000). 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 Section 26000), any condition authorized by Section 2036.SEC. 3.
Division 11 (commencing with Section 26000) is added to the Financial Code, to read:DIVISION 11. Virtual Currency
CHAPTER 1. General Provisions
26000.
For purposes of this division, the following definitions shall apply:26001.
For the purposes of carrying out the provisions of this division, the commissioner may adopt regulations pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).26001.5.
This division shall be known and may be cited as the Virtual Currency Act.CHAPTER 2. Licenses
26002.
A person shall not engage in any virtual currency business in this state unless the person is licensed or exempt from licensure under this division.26004.
The following are exempt from the licensing requirement described in Section 26002:26006.
(a) An applicant for licensure under this division shall pay to the commissioner a nonrefundable application fee of five thousand dollars ($5,000).26008.
(a) Each licensee shall maintain at all times such capital as the commissioner determines is sufficient to ensure the safety and soundness of the licensee and maintain consumer protection and its ongoing operations. 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:CHAPTER 3. Examinations and Records
26009.
(a) The commissioner may at any time and from time to time examine the business and any branch office, within or outside this state, of any licensee in order to ascertain whether that business is being conducted in a lawful manner and whether all virtual currency held or exchanged is properly accounted for.26010.
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 that they are otherwise empowered to take.26011.
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:26012.
A licensee shall maintain any records as required by the commissioner for determining its compliance with this division for at least three years.CHAPTER 4. Enforcement
26013.
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.26014.
(a) The commissioner may prepare written decisions, opinion letters, and other formal written guidance to be issued to persons seeking clarification regarding the requirements of this division.26015.
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 be 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.26016.
At any time, if the commissioner deems it necessary for the general welfare of the public, he or 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.26017.
(a) The commissioner may issue an order suspending or revoking a license, or taking possession of and placing a licensee in receivership, if after notice and an opportunity for hearing, the commissioner finds any of the following:26018.
(a) Every order, decision, or other official act of the commissioner is subject to review in accordance with law.26019.
(a) If the commissioner finds that any of the factors set forth in Section 26017 is true with respect to any licensee and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or revoking the licensee’s license.26020.
The commissioner may assess a civil penalty against a person that violates this division or a regulation adopted or an order issued under this division in an amount not to exceed one thousand dollars ($1,000) for each violation or, in the case of a continuing violation, one thousand dollars ($1,000) for each day or part thereof during which the violation continues, plus this state’s costs and expenses for the investigation and prosecution of the matter, including reasonable attorney’s fees.26022.
The enforcement provisions of this division are in addition to any other enforcement powers that the commissioner may have under law.26023.
(a) The commissioner may by order or regulation grant exemptions from this section in cases where the commissioner finds that the requirements of this section are not necessary or may be duplicative.26024.
In addition to the fees provided in Section 26006, the commissioner shall levy an assessment each fiscal year, on a pro rata basis, on those licensees that at any time during the preceding calendar year engaged in this state in the virtual currency business in an amount that is, in his or her judgment, sufficient to meet the commissioner’s expenses in administering the provisions of this division and to provide a reasonable reserve for contingencies.CHAPTER 5. Miscellaneous Provisions
26025.
A licensee shall disclose to consumers the following disclosure in a form and manner prescribed by the commissioner:26026.
(a) Upon completion of a transaction subject to this division, the licensee shall provide to the consumer a receipt containing the following information:26029.
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. The commissioner shall post on the commissioner’s Internet Web site a list of all persons, transactions, or classes of person or transactions exempt pursuant to this section, and the provision or provisions of this division from which they are exempt.26031.
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 1.2 (commencing with Section 2000)) may request from the commissioner in a form specified by the commissioner to convert their license into a license under Division 1.2 (commencing with Section 2000). A licensee’s request to convert its license shall be accompanied by documentation or other evidence as determined by the commissioner that the licensee meets the requirements for licensure under Division 1.2 (commencing with Section 2000). If a licensee’s request for a converted license is granted, the licensee shall be subject to Section 2178 in order to thereafter engage in any virtual currency business.26032.
(a) A person or entity conducting virtual currency business with less than one million dollars ($1,000,000) in outstanding obligations and whose business model, as determined by the commissioner, represents low or no risk to consumers may register with a five-hundred-dollar ($500) license fee with the commissioner and, if approved, receive a provisional license to conduct virtual currency business. A person or entity that receives such a license shall also register with FinCEN as a money services business, if applicable.CHAPTER 6. Operative Date
26040.
This division shall become operative on July 1, 2018.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.