Assemblyman Matt Dababneh, who penned California’s AB-1326 bill seeking to regulate virtual currency businesses, has defended his proposal against critics.
Last week, the Electronic Frontier Foundation (EFF) said the bill, which would prohibit virtual currency businesses from operating unless licensed to do so by the Department of Business Oversight (DBO), threatened the future of digital currency experimentation and innovation in the state of California.
Dababneh said in a statement:
“First, EFF has little expertise in the area of financial regulation and is generally beyond its depths on the appropriate levels of safety and soundness regulation required of financial service providers.”
He continued: “EFF argues that the language in AB-1326 is vague, making it unclear who should be licensed and that it contains requirements that it will stifle innovation. The language in the bill is very clear and has been negotiated with the companies that actually develop platforms in the virtual currency ecosystem.”
The very entities that will be licensed, Dababneh added, have been comfortable with the clarity contained in the legislation, which he claims, includes innovation-friendly provisions.
EFF had previously stated it had philosophical issues with the bill, saying the regulation was premature and that having different state regulations would prove confusing for consumers.
The Assemblyman refuted EFF’s claims, noting regulation was necessary as consumers had lost over half a billion dollars due to scams and hackings in the bitcoin space to date. “AB-1326 treats virtual currency companies just like any other financial service. If you hold value for a consumer, then the consumer must have protection and potential redress if something goes wrong.”
Distance from the BitLicense
Dababneh distanced his bill from New York’s BitLicense, commenting that AB-1326 was “far friendlier to innovators and the long-term future of virtual currency”.
As he continued to defend his bill against further criticism by the EFF, Dababneh concluded by saying:
“Not only has EFF never been engaged with my office, but their tactics have not altered one word of the bill language. Rather, I have worked with groups that are interested in making progress rather than those that have no positive input to offer and only make specious arguments.”
The Copia Institute is also opposing the bill.
San Francisco image via Shutterstock.