Bill Text: CA AB2269 | 2021-2022 | Regular Session | Amended
Bill Title: Digital financial asset businesses: regulation.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Vetoed) 2022-09-23 - Vetoed by Governor. [AB2269 Detail]
Download: California-2021-AB2269-Amended.html
Amended
IN
Senate
August 11, 2022 |
Amended
IN
Senate
June 30, 2022 |
Amended
IN
Senate
June 27, 2022 |
Amended
IN
Senate
June 06, 2022 |
Introduced by Assembly Member Grayson (Coauthors: Assembly Members Quirk and Stone) (Coauthor: Senator Limón) |
February 16, 2022 |
LEGISLATIVE COUNSEL'S DIGEST
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.
Division 1.25 (commencing with Section 3101) is added to the Financial Code, to read:DIVISION 1.25. Digital Financial Assets Businesses
CHAPTER 1. General Provisions
3101.
This division shall be known as the Digital Financial Assets Law.3102.
For purposes of this division:(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)“Reciprocity agreement” means an arrangement between the department and the appropriate licensing agency of another state
which permits a licensee operating under a license granted by the other state to engage in digital financial asset business activity with or on behalf of a resident.
(q)“Registrant” means a person that has registered with the state under Section 3206 to conduct digital financial asset business activity.
(r)“Registration” means the ability under Section 3206 to conduct digital financial asset business activity.
(s)
(t)
(u)
(v)
(w)
(x)
(y)
3103.
(a) Except as otherwise provided in subdivision (b) or (c), this division governs the digital financial asset business activity of a(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
CHAPTER 2. Licensure
3201.
(b)The person is registered with the department and operating in compliance with Section 3206.
3202.
(a) An application for a license under this division shall meet all of the following requirements:(J)
(K)
(L)
(M)
(N)
(O)
(P)
(Q)
(R)
(S)
(T)
(U)
3203.
(a) (1) (A) A licensee shall maintain a surety bond or trust account in United States dollars in a form and amount as determined by the department for the protection of residents that engage in digital financial asset business activity with the licensee.3204.
(a) Absent good cause, the department shall issue a license to an applicant if the applicant complies with this chapter and pays the costs of the investigation under subdivision (e) of Section 3202 and the initial licensee fee under paragraph (3) of subdivision (a) of Section 3202 in an amount specified by the department.3205.
(a) Subject to subdivision (g),(10)The name, United States Postal Service address, and telephone number of any person that manages a server used by the licensee in conducting its digital financial asset business activity with, or on behalf of, a resident.
(a)A person whose volume of digital financial asset business activity in United States dollar equivalent of digital financial assets does not exceed thirty-five thousand dollars ($35,000) annually may engage in digital financial asset business activity with, or on behalf of, a resident under a registration without first obtaining a license under this division if the person does all of the following:
(1)Files with the department a notice in the form and medium prescribed by the department of its intention to engage in digital financial asset business activity with, or on behalf of, a resident.
(2)Provides the information required for an investigation under Section 3202.
(3)States the anticipated digital financial asset business activity for its next fiscal quarter.
(4)Pays the department a registration fee in an amount determined by the department that does not exceed the reasonable costs of regulation.
(5)If required to register with the Financial Crimes Enforcement Network of the United States Department of the Treasury as a money service business, provides the department evidence of the registration.
(6)Provides evidence that the person has policies and procedures to comply with the Bank Secrecy Act (31 U.S.C. 5311 et seq.) and other applicable laws.
(7)Describes the source of funds and credit to be used by the person to conduct digital financial asset business activity with, or on behalf of, a resident and provides evidence of, and agrees to maintain, the minimum net worth and reserves required by Section 3203 and sufficient unencumbered reserves for winding down operations.
(8)Provides the department with evidence that the person has in place policies and procedures to comply with Chapter 3 (commencing with Section 3301), Chapter 5 (commencing with Section 3501), Chapter 6 (commencing with Section 3601), and any other provision of this division designated by the department.
(9)Provides the department with a copy of its most recent financial statement, whether reviewed or audited.
(b)Before the volume of digital financial asset business activity of a registrant with, or on behalf of, residents exceeds thirty-five thousand dollars ($35,000) annually in United States dollar equivalent of digital financial assets, the registrant shall file an application for a license under this division and may continue to operate after the volume of activity exceeds thirty-five thousand dollars ($35,000) annually while its application for license is pending.
(c)For good cause, the department may suspend or revoke a registration under this section without a prior hearing or opportunity to be heard.
(d)A registrant shall cease all digital financial asset business activity with,
or on behalf of, residents pursuant to the following:
(1)If department denies the registrant’s application for a license under this division, the registrant shall cease all digital financial asset business activity one day after the registrant receives notice in a record that the department has denied the application.
(2)If the department suspends or revokes the registration, the registrant shall cease all digital financial asset business activity one day after the department sends notice of the suspension or revocation in a record to the registrant, at the address provided for receiving communications from the department, by a means reasonably selected for the notice to be received by the recipient in one day.
(3)If the digital financial asset business activity of the registrant with, or on behalf of, residents exceeds thirty-five thousand dollars ($35,000) annually in United States dollar equivalent of digital financial assets, and the registrant has not filed an application for a license under this division.
(4)On the second anniversary of the date of the registration.
(e)For purposes of this section, “volume of digital financial asset business activity” means the sum of digital financial assets issued, exchanged, stored, or transferred.
3207.
A license3208.
The department may adopt rules necessary to implement this division and issue guidance as appropriate.CHAPTER 3. Examination
3301.
(a) (1) (A) The department may, at any time and from time to time, examine the business and any office, within or outside this state, of any licensee,3302.
(a) A licensee(8)A report of any digital financial asset business activity transaction with, or on behalf of, a resident that the licensee or registrant was unable to complete.
3303.
The department may cooperate, coordinate, jointly examine, consult, and share records and other information with the appropriate regulatory agency of another state, a self-regulatory organization, federal or state regulator of banking or nondepository providers, or a regulator of a jurisdiction outside the United States, concerning the affairs and conduct of a licensee3305.
(a) A licensee3306.
(a) For purposes of this section, “proposed person to be in control” means the person that would control a licensee(4)In the case of a registrant, the information that Section 3206 would require if the proposed person to be in control already had control of the registrant.
(5)In the case of a registration, a registration under Section 3206 by the proposed person to be in control.
3307.
(a) At least 30 days before a proposed merger or consolidation of a licensee(4)In the case of a registrant, the information required by Section 3206 concerning the person that would be the surviving entity in the proposed merger or consolidation.
CHAPTER 4. Enforcement
3401.
For the purpose of this chapter, “enforcement measure” means an action3402.
(a) The department may take an enforcement measure against a(D)Another dishonest act.
(E)