Though it may face resistance from the Bitcoin supporters, the Californian state assembly is considering legislation that would require all virtual currency businesses to acquire a US$5,000 license to operate legally. For many observers the legislation is similar to BitLicense which was proposed by the New York attorney Benjamin Lasky.
According to the document the existing legislation around businesses transmitting consumer money is being extended for which the West Coast state is now looking to include virtual currency companies from the crypto-currency sector in the regulations to participate as well. Nonetheless, as it draws comparison with BitLicense, it is expected to gain controversy.
The proposed legislation in Bill AB-1326 describes its purpose and says that it would prohibit a person from engaging in this state in the business of virtual currency, 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.
According to the framers of the document alongside paying the Californian treasury US$5,000, applicants will need to provide extensive background information for both their business and themselves. Nonetheless, even when things go right for the company, it will still face strict money control requirements as safeguard.
For instance, the need for a cash reserve equal to 100% of funds deposited by customers for transmission will be required from the users. There are stark similarities between the New York’s BitLicense and the proposed laws in California as both bills appear to represent lawmakers struggling to get to grips with the nature of crypto-currencies.
The Proposed Law will Impose Heavy State Control on Bitcoin Companies
The proposed law says that 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.
According to the observers if passed, the rules look set to vastly increase the difficulty start-ups face when entering the crypto-currency sector. They believe that it is designed to offer consumers financial protection when using conventional money transmission services. , the regulation’s scope covers nearly the entire of the crypto-currency space.
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