California Senate has amended proposed bitcoin bill to include a provisional application process for small businesses in the digital currency sector.
The basic part of the AB-1326 bill sets obligation for individuals or legal entities with bitcoin services, or any other digital currencies, to obtain a license for this business. An amended draft of this bill saw changes at California Senate Committee on Banking and Finance, requiring small businesses to get conditional approval from the California Commission of Business Oversight pursuant to provisions of state’s Money Transmission Act.
According to the official text, any person or legal entity related to bitcoin services with “less than $1,000,000 in outstanding obligations” and entire business model “representing low or no risk to consumers” may register with a $500 license fee and get provisional license to conduct digital currency business.
All the businesses asking for license will have to register with the US Financial Crimes Enforcement Network (FinCEN). The institution will provide provisional approval on the grounds of considering transaction volume (expected), risk mitigation strategies and the entire nature of the business. Every provisional license will last for two years and non-qualified entities or individuals will have to contact respective regulator in 15 days or will have 30 days for full licensure.
This has been highly welcomed by most of bitcoin developers and startups in California, which already work on blockchain projects and any other digital currency technology-related services, and such full-license process could take crucial time and money of their business. Similar license could be obtained in the state of New York, which we already reported in June here.
Moreover, an advantage of a new regulation is that it defines exactly “virtual currency business,” cutting the previous definition of bitcoin exchange, as it used to comprise of any entity that kept “full custody or control of virtual currency in this state on behalf of others” or provided exchange services to citizens in California.
Further improvement for the bitcoin business sector could be seen in connection to agents’ hiring. Firstly, the bill expected state institutions to provide background check of agents, while they will have to sing a contract with definition of scope of their work and confirm compliance with the law. According to the above-mentioned amendment, this clause has been removed.
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