Will California License Virtual Currency Issuers?
The California Department of Business Oversight regulates the money transmission business pursuant to the Money Transmission Act, Cal. Fin. Code § 2000 et seq. The Act currently defines "money transmission" as any of the following:
Selling or issuing payment instruments;
Selling or issuing stored value; or
Receiving money for transmission.
Assembly Member Ian Calderon recently introduced a bill, AB 2150, that would add "issuing, transferring, or storing a virtual currency on behalf of a consumer." The bill defines "virtual currency" as "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." Virtual currency would not include digital units that (i) are used solely within online gaming platforms with no market or application outside of those gaming platforms; (ii) are used exclusively as part of a consumer affinity or rewards program; or (iii) can be redeemed for goods, services, or for purchases with the issuer or other designated merchants but cannot be converted into, or redeemed for, fiat currency.