A digital currency bill has been proposed and amended in the state of California, easing the burden for bitcoin startups. The initial proposal required individuals and companies offering services that involve bitcoin or other digital currencies to first obtain a license.
However, this could wind up stifling innovation and being too costly for bitcoin startups. With that, the revised version enables small-scale business concepts to receive conditional approval from the state’s Commission of Business Oversight under the state’s Money Transmission Act.
Lower Burden on Bitcoin Startups
“The bill would authorize a person or entity conducting virtual currency business with less than $1,000,000 in outstanding obligations and whose business model, as determined by the commissioner, represents low or no risk to consumers to register with a $500 license fee and, if approved, receive a provisional license to conduct virtual currency business,” indicated the draft of the bill.
Apart from that, the amendments also included revisions for the definition of “virtual currency businesses” and reduced its scope. The previous definition covered bitcoin startups and entities that maintained “full custody or control of virtual currency in this state on behalf of others” or offered exchange services to Californian citizens. With the revised definition, bitcoin exchanges don’t need to seek licensure.
Provisional approval would be subject to a process that would consider anticipated transaction volume, existing risk mitigation strategies and the overall nature of the business, and it would carry a two-year duration. Entities that no longer qualify would have 15 days to contact state regulators, and an additional 30 days to seek full licensure.
A similar provision has been included in New York’s BitLicense framework, which has also been heavily criticized for hampering developments among bitcoin startups and the rest of the industry. BitLicense is already in effect and bitcoin startups have been given a 45-day grace period to comply.