Although home to a sizeable majority of the burgeoning bitcoin industry, California has been relatively quiet on the subject of whether it will seek to regulate digital currency businesses.
However, this could soon change, according to new statements from California’s Department of Business Oversight (DBO), the state’s financial services and money transmitters regulator.
Speaking to CoinDesk, spokesperson Tom Dresslar confirmed his agency intends to hold a meeting in mid-December that could determine if and when California will decide to clarify the actions the bitcoin industry must take to serve its consumers.
Dresslar said:
“We’re looking at the extent to which our current law gives us the ability to regulate, what the potential approaches to regulation would be and the extent to which we want to regulate.”
Emphasizing that any conclusions about the meeting are likely premature, Dresslar said the DBO could determine whether the agency will “proceed down a regulatory path”.
Dresslar noted that California is observing the actions taken by other US states, including Kansas, New York and Texas. As such, the agency said new regulation could require bitcoin businesses to become licensed, maintain reserves and have employees undergo criminal background checks, all components of New York’s proposed BitLicense.
The statements notably follow an Assembly Bill approved by California Governor Jerry Brown earlier this year that gave bitcoin the status of ‘lawful money’ under state law alongside rewards points, coupons and other commonly issued forms of value.
The power to regulate
Dresslar indicated that the department has been holding meetings on digital currencies since November 2013, and that a dedicated task force was created to study the issue at that time.
The opinion of this working group, he said, is that the DBO could regulate virtual currency “to some extent”, and that some applications of the technology would qualify as a medium of exchange under state definitions.
Still, he cautioned that even though this conclusion has been reached, the group requires more time to deliberate other issues.
“Even though the consensus is that we could regulate, the question is who do we regulate, and that’s a decision that ultimately the department will make,” he added.
Emphasizing consumer protection
Throughout the conversation, Dresslar stressed that California’s goal with any action would be to ensure that the state’s consumers are protected from the potential risks associated with interacting with the new technology.
“If we decide to go down this path, our primary objective will be to provide consumer protection to make sure they are fully aware of the risks associated with virtual currency and are afforded with reasonable protections against those risks,” Dresslar said.
He further told Bloomberg that the agency is unsure whether Governor Brown would need to approve any measure or approach it would adopt.
Dresslar stated that he doesn’t want to speculate as to what the implications of such provisions would mean for the state’s business community, concluding:
“I think those assessments would be better made after a regulatory structure is adopted.”
California flag image via Shutterstock