This week, at the tail-end of the legislative session, California legislators have introduced a bill (amended from a bill originally introduced in April 2015) that statutorily addresses the increasingly topical question of how to regulate the emerging crypto-currency market.

The amendment, introduced on August 8, 2016, is a vast departure from the earlier iterations of the proposed bill and addresses many questions about regulating this unique space. With the legislative session ending this month, however, the changes have many in the industry asking: Is this proposed bill ripe for lawmaker approval? While the attempt at specializing the Program towards this unique industry appears to have many advantages over other licensing systems, the bill as-written also introduces various ambiguities — especially regarding questions of the proposed bill’s scope, definitions, and how a statute will be applied in practice. Involvement of industry members in drafting such a bill could help alleviate those concerns. Moreover, several states have already attempted to address this space — with varying success. The ULC is currently engaged in drafting a uniform Virtual Currency Business Act, which aims to unify state systems and avoid a patchwork of conflicting state laws. By enacting this proposed bill, California would be going it alone with an approach that does not appear to be harmonized with the best (or the worst) state solutions out there to date.

What is now essentially a complete overhaul of the original bill, the current version changes what was originally a licensing structure to an enrollment program. To illustrate, the new enrollment program requires digital currency businesses in California to enroll and introduces various industry-specific definitions and enrollment requirements. The proposed bill also gives the DBO authority to regulate. Here is our Summary and Comparison – California Legislature Assembly Bill No. 1326 of the different aspects of the newly proposed bill, which also includes a side-by-side comparison of the new language with the earlier proposed bill.