After a cup of menstrual blood went flying across the Senate floor, I had assumed 2019 would be California’s wildest legislative session for a while. Covid-19 proved me unfortunately wrong. The Legislative process, calendar and agenda was quickly thrown into the dumpster fire of March and everyone turned back to the white board.
When the Legislature returned from its two-month long “stay at home” recess in May, it passed a stripped-down state budget which reflected lower revenues given the pandemic-induced recession. They then began prioritizing and shelving hundreds of bills that would no longer make the cut in the truncated legislative calendar. Faced with less time to hold hearings and less money to spend on new proposals, legislators shelved an estimated three-quarters of the bills introduced at the beginning of the two-year session.
Here’s what happened for BAC’s blockchain/crypto sponsored bills:
AB 953 (Ting, San Francisco), which would have allowed state and local taxes to be paid with stablecoins, was sadly withdrawn, lacking a clear Covid-19 nexus.
AB 2004 (Calderon, Whittier) marked the first time verifiable credentials saw legislative debate. The bill to allow the use of verifiable credentials for covid-19 test results and other medical records made it through both houses with bipartisan support. Due to state budget restraints, it was ultimately vetoed, however the concept gained significant legislative momentum quickly. We are actively working on our strategy for verifiable credentials policy next year.
AB 2150 (Calderon, Whittier) spun through several dizzying iterations. The Blockchain Advocacy Coalition worked closely with Assemblymember Calderon’s office to suggest amended language that would have directed the Department of Business Oversight to study the applicability of SEC Commissioner Hester Pierce’s Proposal to an intrastate safe harbor. An idea that in previous years seemed far fetched suddenly had political legs and was well received by the agency and several committees. It died in the Senate Appropriations Committee along with nearly everything else that had a significant price tag or wasn’t urgently related to the pandemic.
Fruitful discussions with the DBO about crypto regulation were well timed, however. Given the microscope on consumer protections due to the economic distress caused by the pandemic, the agency received a $19.2 million allocation and a new name: California Department of Financial Protection and Innovation (CDFPI- much worse acronym imo).
HERE’S THE PART YOU NEED TO PAY ATTENTION TO:
With this new agency budget/mission, comes a very likely change in the way cryptocurrency is regulated in CA. AB 1864 does a few things:
- Establishes a Financial Technology Innovation Office based in San Francisco
- Requires the department to promulgate rules regarding registration requirements
- Charges this department with regulating currently unregulated financial services including issuers of stored value or such business
This marks a departure from the agency’s previous approach. Virtual currency businesses did not have any separate registration requirements or the need to apply for a money transmitter license. BAC participated in stakeholder calls this summer about the agency’s expansion and we are continuing to engage with the agency about how these registration requirements will be created. Cryptocurrency businesses need to understand that the agency has been given the authority to create these standards without going back to the legislature, so early engagement is key.
Interested in joining our coalition and having a seat at the table? Contact: firstname.lastname@example.org
BAC has previously facilitated educational workshops with the Department of Business Oversight and hosted roundtables with Gov. Newsom, Treasurer Ma and the Legislature to build an understanding of the importance of the blockchain industry in CA.