California legislature to regulate virtual currencies in same way as other currencies; cyrpto-currency start-ups celebrate
The legislature in California has approved a draft law that would impose the same of regulation on virtual currencies that is applied to any other currency, in a move that is highly positive for the many virtual currency start-ups in the state; in other cases, such as in New York, extra requirements have been made of those firms wishing to deal with digital currencies. A number of Bitcoin startups, BitGo, Blockstream, Xapo, Chain, Gem, Bitnet, and one blockchain company, Mirror, have signed a letter due to the news, highlighting that California is already home "for much of the innovation in Bitcoin and blockchain technology", and it is thus imperative that the state's regulatory approach is not too burdensome.
California-based Bitcoin startups, of which there are many, have applauded California's proposed approach toward virtual currency Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term.

Last month, the California Assembly approved a draft bill that would regulate how businesses dealing in virtual currency can operate in the state. The regulations would effectively impose the equivalent of money services business rules on businesses holding virtual currency on behalf of others. It would not, however, make additional virtual currency-specific demands as found with New York State's BitLicense, thereby exempting businesses already licensed for money services from duplicate licensing.

The Bitcoin startups commenting on the letter include: BitGo, Blockstream, Xapo, Chain, Gem, Bitnet, as well as Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology startup Mirror. In their letter, the companies highlight the fact the California is home "for much of the innovation in Bitcoin and blockchain technology," which has already brought thousands of jobs to the state. As such, the right approach to regulation is especially important in California relative to elsewhere.

The companies highlighted the multiple value-adds that digital currency and its technology bring to the table, and how it can provide opportunities for financial inclusion in the state and beyond.

For taking a different path than New York's BitLicense, they write:

"We applaud the crafters of AB 1326 “Virtual Currency” for exempting holders of Money Transmission licenses and eliminating unnecessary redundancy. Such licensing already addresses much of the risk from a consumer standpoint, as most of the services that are holding full custody of users’ digital currency funds interact with US dollars."

They also applauded a recent amendment that allowed companies with less than $1 million in obligations, and whose business models are deemed no or low risk, to get a provisional license for a lower fee.

In addition, they acknowledged the removal of conversion or exchange services from those constituting a virtual currency business.

The only outstanding item was further clarification requested on the definition of "full custody" or "control" over customer funds. In the New York regulations, concern was raised for some multisignature configurations, where private keys are held by more than one party.