California bill could add reporting requirements for Bitcoin companies
A law has been proposed in California that would create a licensing infrastructure for Bitcoin-related companies operating in the state; the California Senate Appropriations Committee has voted six to one to advance the bill. Should the bill become law, it would add new reporting requirements to licensed businesses beyond existing language that mandates annual and quarterly financial audits; it would come into effect from 1st July 2016. California's regulatory stance on digital currencies in seen to be key, as many Bitcoin start-ups operate in the state, and they depend on a friendly regulatory environment.
(d) In advertising and marketing materials, an enrollee, and any person or entity acting on an enrollee’s behalf, shall not make any false, misleading, or deceptive representations or omissions. Any representation or omission that is contrary to any of the disclosures required under this division is presumptively false, misleading, and deceptive.

(c) An enrollee’s advertising and marketing materials shall comply with all disclosure requirements applicable under federal and state laws, rules, and regulations.

(b) An enrollee shall maintain, for examination by the commissioner, all advertising and marketing materials, including, but not limited to, print media, Internet media, which includes Internet Web sites and podcasts, radio and television advertising, road show materials, presentations, and brochures. An enrollee shall maintain hard copy, Internet Web site captures, and audio and video recordings of its advertising and marketing materials, as applicable.

26020. (a) An enrollee engaged in digital currency business shall not advertise its products, services, or activities without including the name of the enrollee and the following statement: “Our digital currency business in California is conducted pursuant to the Digital Currency Business Enrollment Program that is administered by the Department of Business Oversight (“DBO”). However, neither the DBO nor any other government agency has reviewed the safety and soundness of our business or the digital currencies in which we transact. For more information about the Enrollment Program, visit: [www.dbo.ca.gov/dc].”

26022. (a) Prior to entering into an initial transaction for, on behalf of, or with a customer, an enrollee shall disclose clearly and conspicuously in writing in English and in any other language that may be spoken by the majority of the customers of the enrollee, all material risks associated with its products, services, and activities and with digital currency generally. The disclosures shall include, but are not limited to, the following:

(1) A statement that, unlike traditional financial institutions, neither the Department of Business Oversight nor any other government agency has licensed, sanctioned, endorsed, or otherwise reviewed the operations of the enrollee or reviewed the enrollee for safety or soundness.

(2) A statement that, unlike some other financial institutions, accounts and value balances are not covered by Federal Deposit Insurance Corporation guarantees or Securities Investor Protection Corporation protections.

(3) A statement that the customer may not be protected if the enrollee becomes insolvent.

(4) A statement that digital currency is not legal tender and is not backed by the government.

(5) A statement that legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, or value of digital currency.

(6) A statement that transactions in digital currency generally are irreversible and that, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.

(7) A statement that some digital currency transactions are deemed completed when recorded on a centralized ledger, which is not necessarily the date or time that the customer initiates the transaction.

(8) A statement that the value of digital currency is usually derived from the continued willingness of market participants to exchange fiat currency for digital currency, which may result in the potential for permanent and total loss of value of a particular digital currency should the market for that digital currency disappear.

(9) A statement that there is no assurance that a person who accepts a digital currency as payment today will continue to do so in the future.

(10) A statement that the volatility and unpredictability of the price of digital currency relative to fiat currency may result in significant loss or tax liability over a short period of time.

(11) A statement that the nature of digital currency may lead to an increased risk of fraud or cyberattack.

(12) A statement that any technological difficulties experienced by the enrollee may prevent the access or use of a customer’s digital currency.

(13) A statement that any bond or trust account for the benefit of customers may not be sufficient to fully cover all losses incurred by customers.

(14) Any other disclosures the commissioner deems are necessary to adequately inform consumers about the risks associated with digital currency.

(b) When opening an account for a new customer, and prior to entering into an initial transaction for, on behalf of, or with the customer, an enrollee shall disclose clearly and conspicuously in writing in English and in any other language that may be spoken by the majority of the customers of the enrollee, all relevant general terms and conditions associated with its products, services, and activities. At minimum, if applicable, the disclosures shall include:

(1) The customer’s liability for unauthorized digital currency transactions.

(2) The customer’s right to stop payment of a preauthorized digital currency transfer and the procedure to initiate a stop-payment order.

(3) The enrollee’s liability to the customer under any applicable federal or state laws, rules, or regulations.

(4) The circumstances under which the enrollee will, absent a court or government order, disclose information concerning the customer’s account to third parties.

(5) The customer’s right to receive periodic account statements and valuations from the enrollee.

(6) The customer’s right to receive a receipt, trade ticket, or other evidence of a transaction.

(7) The customer’s right to prior notice of a change in the enrollee’s rules or policies.

(8) Any other disclosures that are customarily given in connection with the opening of a customer account.

(9) A statement of the following: “The digital currency business of [Enrollee’s legal name] in California is conducted pursuant to the Digital Currency Business Enrollment Program that is administered by the Department of Business Oversight (“DBO”). [Enrollee’s legal name] conducts digital currency business in California under the name(s) [a listing of all trade names enrollee does business under in California]. If you have complaints with respect to any aspect of the digital currency business conducted by [Enrollee’s legal name], you may contact the Department of Business Oversight at its toll-free telephone number, 1-800-622-0620, by e-mail at consumer.services@dbo.ca.gov, or by mail at the Department of Business Oversight, Consumer Services, 1515 K Street, Suite 200, Sacramento, CA 95814. For more information about the Digital Currency Business Enrollment Program visit: [www.dbo.ca.gov/dc].”

(c) Prior to each transaction in digital currency, for, on behalf of, or with a customer, an enrollee shall furnish to the customer a written disclosure clearly and conspicuously in writing in English and in any other language that may be spoken by the majority of the customers of the enrollee, containing the terms and conditions of the transaction. At minimum, if applicable, the disclosures shall include:

(1) The amount of the transaction.

(2) Any fees, expenses, and charges borne by the customer, including applicable exchange rates.

(3) The type and nature of the digital currency transaction.

(4) A warning if the transaction, once executed, cannot be reversed.

(5) Any other disclosures that are customarily given in connection with a transaction of this nature.

(d) The disclosures required by this section may be provided to the customer electronically and shall in be in minimum 10-point font.

(e) An enrollee shall ensure that all disclosures required by this section are acknowledged as received by customers.