Today's Law As Amended

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AB-1326 Digital currency.(2015-2016)



SECTION 1.
 (a) The Legislature finds and declares the following:
(1) Digital currency is a new technology that, some predict, will increase the speed and reduce the costs of payment transmission.
(2) Along with digital currency, a new industry has emerged that specializes in providing digital currency-related services.
(3) Both the digital currency technology and the industry of related services are in their developmental stages and evolving rapidly.
(4) It is appropriate for the state to play a role in the development of the new industry, for example by encouraging compliance with law, preventing illicit finance, and ensuring that users receive appropriate risk disclosures.
(5) At the same time, it is appropriate for the state to nurture, rather than stifle, these ongoing innovations in payment technology.
(b) In light of the findings and declarations above, the Legislature intends for the Digital Currency Business Enrollment Program, created by this act, to do all of the following:
(1) Enable the Department of Business Oversight to identify all of the businesses providing digital currency services in the state.
(2) Enable businesses to provide digital currency services in the state in a lawful and transparent manner.
(3) Enable the Department of Business Oversight to gather from businesses providing digital currency services any information helpful to determining whether and how the industry should be licensed and regulated in the future.
(4) Ensure that consumers receive appropriate risk disclosures and information about digital currency and digital currency-related services.

SECTION 1.SEC. 2.

 Section 107 of the Corporations Code is repealed.

107.
 No corporation, social purpose corporation, association, or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.

SEC. 3.

 Section 2003 of the Financial Code is amended to read:

2003.
 For purposes of this division, the following definitions shall apply:
(a) “Affiliate,” when used with respect to a specified person, means any person controlling, controlled by, or under common control with, that specified person, directly or indirectly through one or more intermediaries. For purposes of subdivisions (s) and (x), a specified person is affiliated with another person if that person controls, is controlled by, or under common control through the ownership directly or indirectly of shares or equity securities possessing more than 50 percent of the voting power of that specified person.
(b) “Agent” means a person that is not itself licensed as a money transmitter in California and provides money transmission in California on behalf of the licensee, provided that the licensee becomes liable for the money transmission from the time money or monetary value is received by that person. However, “agent” does not include any officer or employee of the licensee when acting as such at an office of a licensee.
(c) “Applicant” means a person that files an application for a license or for acquisition of control of a licensee under this division.
(d) “Average daily outstanding” means the amount of outstanding money transmission obligations in California at the end of each day in a given period of time, added together, and divided by the total number of days in that period of time.
(e)  “Branch office” means any office in this state of a licensee or agent at which the licensee receives money or monetary value to provide money transmission, either directly or through an agent.
(f) “Business day” means one of the following:
(1) When used with respect to any act to be performed in this state, any day other than Saturday, Sunday, or any other day that is provided for as a holiday in the Government Code.
(2) When used with respect to any act to be performed in any jurisdiction other than this state, any day other than a day that is a legal holiday under the laws of that jurisdiction.
(g) “Commissioner” means the Commissioner of Business Oversight.
(h) “Control” has the meaning set forth in Section 1250.
(i) “Day” means calendar day.
(j) “E-commerce” means any transaction where the payment for goods or services is initiated via a mobile application or an Internet Web site.
(k) “In California” or “in this state” means physically located in California, or with, to, or from persons located in California.
(l) “Issue” and “issuer” mean, with regard to a payment instrument, the entity that is the maker or drawer of the instrument in accordance with the California Commercial Code and is liable for payment. With regard to stored value, “issue” and “issuer” mean the entity that is liable to the holder of stored value and has undertaken or is obligated to pay the stored value. Only a licensee may issue stored value or payment instruments.
(m) “Licensee” means a corporation or limited liability company licensed under this division.
(n) “Material litigation” means litigation that according to United States generally accepted accounting principles is significant to an applicant’s or a licensee’s financial health and would be required to be disclosed in the applicant’s or licensee’s annual audited financial statements, report to shareholders, or similar records.
(o) “Monetary value” means a medium of exchange, whether or not redeemable in money. Monetary value does not include any form of value that qualifies as a digital currency under Division 11 (commencing with Section 26000). 
(p) “Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
(q) “Money transmission” means any of the following:
(1) Selling or issuing payment instruments.
(2) Selling or issuing stored value.
(3) Receiving money for transmission.
(r) “Outstanding,” with respect to payment instruments and stored value, means issued or sold by the licensee in the United States and not yet paid or refunded by the licensee, or issued or sold on behalf of the licensee in the United States by its agent and reported as sold, but not yet paid or refunded by the licensee. “Outstanding,” with respect to receiving money for transmission means all money or monetary value received in the United States for transmission by the licensee or its agents but not yet paid to the beneficiaries or refunded to the person from whom the money or monetary value was received. All outstanding money transmission of a licensee is and shall remain a liability of the licensee until it is no longer outstanding.
(s) “Payment instrument” means a check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any instrument that is redeemable by the issuer for goods or services provided by the issuer or its affiliate.
(t) “Person” means an individual, corporation, business trust, estate, trust, partnership, proprietorship, syndicate, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or joint stock company, or any other organization or legal or commercial entity, provided, however, that “person,” when used with respect to acquiring control of or controlling a specified person, includes any combination of two or more persons acting in concert.
(u) “Receiving money for transmission” or “money received for transmission” means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means. The term does not include sale or issuance of payment instruments and stored value.
(v) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(w) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(x) “Stored value” means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include a credit card voucher, letter of credit, or any stored value that is only redeemable by the issuer for goods or services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(y) “Traveler’s check” means an instrument that meets all of the following:
(1) Is designated on its face by the term “traveler’s check” or by any substantially similar term or is commonly known and marketed as a traveler’s check.
(2) Contains a provision for a specimen signature of the purchaser to be completed at the time of purchase.
(3) Contains a provision for a countersignature of the purchaser to be completed at the time of negotiation.
This section shall remain in effect only until January 1, 2022, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2022, deletes or extends that date.

SEC. 4.

 Section 2003 is added to the Financial Code, to read:

2003.
 For purposes of this division, the following definitions shall apply:
(a)    “Affiliate,” when used with respect to a specified person, means any person controlling, controlled by, or under common control with, that specified person, directly or indirectly through one or more intermediaries. For purposes of subdivisions (s) and (x), a specified person is affiliated with another person if that person controls, is controlled by, or under common control through the ownership directly or indirectly of shares or equity securities possessing more than 50 percent of the voting power of that specified person.
(b) “Agent” means a person that is not itself licensed as a money transmitter in California and provides money transmission in California on behalf of the licensee, provided that the licensee becomes liable for the money transmission from the time money or monetary value is received by that person. However, “agent” does not include any officer or employee of the licensee when acting as such at an office of a licensee.
(c) “Applicant” means a person that files an application for a license or for acquisition of control of a licensee under this division.
(d) “Average daily outstanding” means the amount of outstanding money transmission obligations in California at the end of each day in a given period of time, added together, and divided by the total number of days in that period of time.
(e) “Branch office” means any office in this state of a licensee or agent at which the licensee receives money or monetary value to provide money transmission, either directly or through an agent.
(f) “Business day” means one of the following:
(1) When used with respect to any act to be performed in this state, any day other than Saturday, Sunday, or any other day that is provided for as a holiday in the Government Code.
(2) When used with respect to any act to be performed in any jurisdiction other than this state, any day other than a day that is a legal holiday under the laws of that jurisdiction.
(g) “Commissioner” means the Commissioner of Business Oversight.
(h) “Control” has the meaning set forth in Section 1250.
(i) “Day” means calendar day.
(j) “E-commerce” means any transaction where the payment for goods or services is initiated via a mobile application or an Internet Web site.
(k) “In California” or “in this state” means physically located in California, or with, to, or from persons located in California.
(l) “Issue” and “issuer” mean, with regard to a payment instrument, the entity that is the maker or drawer of the instrument in accordance with the California Commercial Code and is liable for payment. With regard to stored value, “issue” and “issuer” mean the entity that is liable to the holder of stored value and has undertaken or is obligated to pay the stored value. Only a licensee may issue stored value or payment instruments.
(m) “Licensee” means a corporation or limited liability company licensed under this division.
(n) “Material litigation” means litigation that according to United States generally accepted accounting principles is significant to an applicant’s or a licensee’s financial health and would be required to be disclosed in the applicant’s or licensee’s annual audited financial statements, report to shareholders, or similar records.
(o) “Monetary value” means a medium of exchange, whether or not redeemable in money.
(p) “Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
(q) “Money transmission” means any of the following:
(1) Selling or issuing payment instruments.
(2) Selling or issuing stored value.
(3) Receiving money for transmission.
(r) “Outstanding,” with respect to payment instruments and stored value, means issued or sold by the licensee in the United States and not yet paid or refunded by the licensee, or issued or sold on behalf of the licensee in the United States by its agent and reported as sold, but not yet paid or refunded by the licensee. “Outstanding,” with respect to receiving money for transmission means all money or monetary value received in the United States for transmission by the licensee or its agents but not yet paid to the beneficiaries or refunded to the person from whom the money or monetary value was received. All outstanding money transmission of a licensee is and shall remain a liability of the licensee until it is no longer outstanding.
(s) “Payment instrument” means a check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any instrument that is redeemable by the issuer for goods or services provided by the issuer or its affiliate.
(t) “Person” means an individual, corporation, business trust, estate, trust, partnership, proprietorship, syndicate, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or joint stock company, or any other organization or legal or commercial entity, provided, however, that “person,” when used with respect to acquiring control of or controlling a specified person, includes any combination of two or more persons acting in concert.
(u) “Receiving money for transmission” or “money received for transmission” means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means. The term does not include sale or issuance of payment instruments and stored value.
(v) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(w) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(x) “Stored value” means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include a credit card voucher, letter of credit, or any stored value that is only redeemable by the issuer for goods or services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(y) “Traveler’s check” means an instrument that meets all of the following:
(1) Is designated on its face by the term “traveler’s check” or by any substantially similar term or is commonly known and marketed as a traveler’s check.
(2) Contains a provision for a specimen signature of the purchaser to be completed at the time of purchase.
(3) Contains a provision for a countersignature of the purchaser to be completed at the time of negotiation.
This section shall become operative January 1, 2022.

SEC. 5.

 Division 11 (commencing with Section 26000) is added to the Financial Code, to read:

DIVISION 11. Digital Currency Business Enrollment Program

CHAPTER  1. General Provisions
26000.
 This division shall be known and may be cited as the Digital Currency Business Enrollment Program.
26002.
 For purposes of this division, the following definitions shall apply:
(a) “Circulation” means the capacity for transfer between persons.
(b) “Commissioner” means the Commissioner of Business Oversight.
(c) “Digital currency” means any digital representation of value that can be digitally traded and is used to facilitate the sale, purchase, and exchange of goods, services, or other digital representations of value among its users. Digital currency does not include fiat currency, e-money, or currency value of which was fixed by its issuer to the value of a fiat currency.
(d) “Digital currency business” means the business of offering or providing the service of storing, transmitting, exchanging, or issuing digital currency. “Digital currency business” does not include the following:
(1) Transmission of digital currency where the transaction is undertaken for nonfinancial purposes and does not involve the transfer of more than a nominal amount of digital currency necessary to complete the transaction.
(2) Online games or gaming platforms that use digital currency that (A) have no market or application outside of those games or gaming platforms, (B) cannot be converted into, or redeemed for, fiat currency or digital currency, and (C) are not redeemable for real-world goods, services, discounts, or purchases.
(3) Customer affinity or rewards programs that use digital currency that can be redeemed for goods, services, or for purchases with the issuer or other designated merchants, but cannot be converted into, or redeemed for, fiat currency or digital currency that is not part of the customer affinity or rewards program.
(4) Issuance of a credit card voucher, letter of credit, or any value that is redeemable only by the issuer for goods and services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(5) A person or entity developing, distributing, or servicing digital currency network software.
(6) A person or entity contributing software, connectivity, or computing power to a digital currency network.
(7) A person or entity providing data storage or cybersecurity services for an enrolled digital currency business, if the data storage or cybersecurity services do not store digital currency.
(e) “E-money” means a digital representation of fiat currency used to electronically transfer value denominated in fiat currency.
(f) “Exchanging,” with reference to digital currency, means converting or exchanging fiat currency into digital currency, converting or exchanging digital currency into fiat currency, or converting or exchanging one form of digital currency into another form of digital currency.
(g) “Fiat currency” means government-issued currency that is designated as legal tender or lawful money, through government decree, regulation, or law, of a government or intergovernmental organization, or by agreement between two or more governments, and customarily refers to paper money and coin and that is circulated, used, and accepted as money.
(h) “In this state” or “in California” means physically located in California, or with, from, and to a person located in California.
(i) “Issuing,” with reference to digital currency, means creating, introducing into circulation, controlling, and administering digital currency.
(j) “Person” means an individual, partnership, corporation, association, joint stock association, trust, or other business combination or entity, however organized.
(k) “Program” means the Digital Currency Business Enrollment Program established by this division.
(l) “Storing,” with reference to digital currency, means to have custody or control of digital currency on behalf of others. For the purposes of this subdivision, custody or control of digital currency includes having access to a customer’s digital currency credentials, the ability to execute a digital currency transaction on behalf of a customer, or the ability to prevent a customer from effecting a desired transaction of digital currency.
(m) “Transmitting,” with reference to digital currency, means the transfer of digital currency, by or through a third party, from one person to another person, or from one storage repository of digital currency to another storage repository of digital currency.
26004.
 (a) The Digital Currency Business Enrollment Program is hereby established. The commissioner shall administer the program as required by this division.
(b) The commissioner may make general rules and regulations and specific rulings, demands, and findings for the enforcement of this division, in addition to, and within the general purposes of, this division.
CHAPTER  2. Enrollment
26010.
 (a) A person shall not engage in any digital currency business in this state or offer to engage in digital currency business in this state unless the person is enrolled in the program. An enrollee shall not conduct any digital currency business through an agent or agency arrangement if the agent is not an enrollee.
(b) A person seeking enrollment in the program shall pay to the commissioner a nonrefundable fee of up to five thousand dollars ($5,000), which shall not exceed the reasonable costs of enrolling a person in the program.
(c) A person seeking enrollment in the program shall provide all of the following information to the commissioner in a form and in a medium prescribed by the commissioner by order or regulation:
(1) Legal name of the subject person.
(2) A description of the structure or organization of the subject person, including any parent or subsidiary, and whether any parent or subsidiary is publicly traded.
(3) Fictitious, trade, or business names of the subject person.
(4) Residential and business address of the subject person.
(5) All other physical addresses and locations of the subject person.
(6) A list of any criminal convictions of the person seeking enrollment and any material litigation in which that person has been involved in the past 10-year period.
(7) Any Internet Web site connected with the subject person
(8) Detailed information about the type of digital currency service to be provided, for example storing, transmitting, exchanging, or issuing.
(9) The legal name, any fictitious or trade name, business and residential addresses, and the employment, in the last 10-year period, of each executive officer, manager, director, or person that has control of the subject person.
(10) A list of any criminal convictions and material litigation in which any executive officer, manager, director, or person in control of the subject person has been involved in the past 10-year period.
(11) The number of employees of the subject person, and their titles and responsibilities.
(12) A contact person and his or her e-mail address and telephone number.
(13) Any other license held by the enrollee in California or any other state.
(14) Whether the subject person is a money services business under the regulations adopted pursuant to the federal Bank Secrecy Act (31 C.F.R. Chapter X) or its successor.
(15) Any other information that the commissioner may require by order or regulation.
(d) A person seeking enrollment in the Enrollment Program shall provide to the commissioner, in a form acceptable to the commissioner, fingerprints of the subject person, and of any executive officer, manager, director, or person in control of the subject person. The commissioner may deliver, or cause to be delivered, these fingerprints to local, state, or federal law enforcement agencies.
(e) The commissioner shall permit enrollment in the program unless it appears to the commissioner that the subject person, the directors and officers of the subject person, any person that controls the subject person, and the directors and officers of any person that controls the subject person, are not of good character.
(f) Following enrollment, the enrollee shall notify the commissioner, as soon as practicable, of any changes to the facts provided to the commissioner prior to enrollment pursuant to subdivision (d). The enrollee shall provide the information identified in paragraphs (8) and (9) of subdivision (c) with respect to any new executive officer, manager, or director of the enrollee. Upon receiving this information, the commissioner may disenroll an enrollee if he or she determines that such person or persons are not of good character.
26012.
 A person shall not, directly or indirectly, acquire control of an enrollee unless the commissioner has first approved, in writing, the acquisition of control. An application to acquire control of an enrollee shall be in writing, under oath, and in a form prescribed by the commissioner. The application shall contain information about the proposed controlling person identified in paragraphs (8) and (9) of subdivision (c) of Section 26010. The fee for filing an application for approval to acquire control of an enrollee shall be two thousand five hundred dollars ($2,500), which shall not exceed the costs associated with the approval. For purposes of this section, “control” has the meaning set forth in Section 1250.
26014.
 Persons seeking to engage in both money transmission, as defined in Section 2003, and digital currency business shall obtain both a license under the Money Transmission Act (Division 1.2 (commencing with Section 2000)) and be enrolled in the program.
26016.
 An enrollee shall immediately notify the commissioner in writing if it no longer engages in any digital currency business in this state or offers to engage in digital currency business in this state, or if any other circumstances exist that would otherwise make enrollment in the program no longer applicable.
CHAPTER  3. Advertising, Disclosures, and Receipts
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].”
(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.
(c) An enrollee’s advertising and marketing materials shall comply with all disclosure requirements applicable under federal and state laws, rules, and regulations.
(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.
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.
26024.
 (a) When an enrollee accepts digital currency or fiat currency from a customer, the enrollee shall provide the customer a receipt containing the following information:
(1) The name and contact information of the enrollee, including a telephone number and California mailing address established by the enrollee to answer questions and register complaints.
(2) The type, value, date, and precise time of the transaction.
(3) The fee charged.
(4) The exchange rate, if applicable.
(5) A statement of the liability of the enrollee for nondelivery or delayed delivery.
(6) A statement of the refund policy of the enrollee.
(7) Any additional information the commissioner may require.
(b) Before a new enrollee issues its first receipt to a customer, it shall file with the commissioner a certified copy of the receipt forms to be used. An enrollee shall not use a receipt form if a certified copy of it has not been filed with the commissioner and approved by it or use a receipt form that the commissioner has deemed not to be in compliance pursuant to subdivision (c).
(c) If the commissioner determines, within 30 business days of the filing date of a receipt, that the receipt does not comply with the requirements of this section, the commissioner shall notify the enrollee in writing that the receipt is not in compliance with these requirements.
(d) If a receipt is required by this division to be in English and another language, the English version of the receipt shall govern any dispute concerning the terms of the receipt. However, any discrepancies between the English version and any other version due to the translation of the receipt from English to another language including errors or ambiguities shall be construed against the enrollee and the enrollee shall be liable for any damages caused by these discrepancies.
(e) An enrollee violating the requirements of this section shall be subject to a fine of one hundred dollars ($100) for each violation. This fine shall be in addition to any other enforcement provisions that may apply to the violation.
(f) The receipt required by subdivision (a) may be transmitted to the customer electronically, including by electronic mail or text message. Disclosures in the receipt required by subdivision (a) shall be in a minimum 8-point font, except for receipts provided via mobile telephone or text message.
26026.
 The commissioner may by order or regulation modify the content of the notices and disclosures required under Sections 26020, 26022, and 26024.
CHAPTER  4. Fact Gathering
26030.
 (a) The commissioner may, at any time, require an enrollee and agents of an enrollee to submit to surveys, investigations, questionnaires, and other items for information-gathering in order to ascertain detailed facts about, without limitation, the enrollee’s:
(1) Business model.
(2) Revenue.
(3) Volume of business activity.
(4) Capitalization and net worth.
(5) Bonding and insurance.
(6) Liquidity.
(7) Investment activity in connection with digital currency stored or deposited with the digital currency business.
(8) Cybersecurity and breaches of cybersecurity.
(9) Compliance with the federal Bank Secrecy Act and associated regulations.
(10) Operational safety, including, but not limited to, the proper accounting of an enrollee’s digital currency stored, exchanged, transmitted, or issued by the enrollee.
(11) Advertising materials.
(12) Complaints by the enrollee’s customers and their resolution.
(b) The directors, officers, and employees of any enrollee or agent of an enrollee shall exhibit to the commissioner, on request, any or all of the enrollee’s accounts, books, correspondence, memoranda, papers, and other records and shall otherwise facilitate the commissioner’s fact-gathering so far as it may be in their power to do so. These materials shall be received in confidence by the commissioner and are not public records under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and any regulations adopted thereunder.
(c) An enrollee shall file within 90 days after the end of each fiscal year, or within any extended time as the commissioner may prescribe, an audit report with the commissioner for the fiscal year that shall comply with all of the following provisions:
(1) The audit report shall be based upon an audit of the enrollee conducted in accordance with generally accepted auditing standards and any other requirements as the commissioner may prescribe.
(2) The audit report shall contain audited financial statements of the enrollee for, or as of, the end of the fiscal year, prepared in accordance with generally accepted accounting principles and any other information as the commissioner may require.
(3) The audit report shall be prepared by an independent certified public accountant or independent public accountant who is not unsatisfactory to the commissioner.
(4) The audit report shall include, or be accompanied by, a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the commissioner. If the certificate or opinion is qualified, the commissioner may order the enrollee to take any action as the commissioner may find necessary to enable the independent certified public accountant or independent public accountant to remove the qualification.
(5) The audit report shall be accompanied by financial statements, including balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cash flow, for each calendar year quarter, verified by two of the enrollee’s principal officers. The verification shall state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement in the report is true.
(d) An enrollee shall file an annual report with the commissioner, on or before March 15, providing the relevant information that the commissioner reasonably requires concerning the business and operations conducted by the enrollee within the state during the preceding calendar year. An enrollee shall also make other special reports to the commissioner that may be required by the commissioner from time to time.
(e) The reports required by this section shall be received in confidence by the Commissioner and are not public records under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and any regulations adopted thereunder.
(f) (1) If any enrollee fails to do any of the following, the enrollee shall be liable for a sum of up to one hundred dollars ($100) for every day up to the 10th day:
(A) To make any report required by the commissioner within 10 days from the day designated for the making of the report or within any extension of time granted by the commissioner.
(B) To include in a report any matter required by law or by the commissioner.
(2) Any subsequent failure to perform an act following imposition of a penalty under paragraph (1) shall constitute grounds for immediate disenrollment from the program.
(g) The commissioner shall annually prepare and make available to the public a report on the state of the digital currency business industry compiling the information obtained pursuant to this section.
CHAPTER  5. Bank Secrecy Act
26036.
 (a) An enrollee that is a money services business under the regulations adopted pursuant to the federal Bank Secrecy Act (31 C.F.R. Chapter X) or its successor shall comply with those regulations.
(b) The commissioner may, at any time, and from time to time, examine the business and any office, within or outside this state, of any enrollee or any agent of an enrollee in order to ascertain compliance with this rule.
CHAPTER  6. Fees
26040.
 Following enrollment in the program, an enrollee shall pay thereafter an annual fee of two thousand five hundred dollars ($2,500) to maintain enrollment in the program.
26042.
 All moneys received by the commissioner in connection with this division shall be placed in the Digital Currency Business Enrollment Program Account, which is hereby created in the State Corporations Fund, to be available, upon appropriation by the Legislature, to the commissioner for expenditure for the purposes of the program.
CHAPTER  7. Enforcement
26046.
 (a) Whenever, in the opinion of the commissioner, any person who is not enrolled in the program engages in any digital currency business in this state or is offering to engage in digital currency business in this state, or is violating any provision of this division or any regulation or order adopted or issued pursuant to the division, the commissioner may issue an order directing the person to desist and refrain from engaging in the act, practice, or course of business, or take other action necessary or appropriate to comply with this division. If, after an order has been served, a request for hearing is filed in writing within 30 days of the date of service of the order, a hearing shall be held. If that person fails to file a written request for a hearing within 30 days from the date of service of the order, the order shall be deemed a final order of the commissioner and is not subject to review by any court or agency, notwithstanding that every official act of the commissioner is subject to judicial review in accordance with law.
(b) Whenever the commissioner believes from the evidence satisfactory to the commissioner that any person who is not enrolled in the program is engaging in any digital currency business in this state or is offering to engage in digital currency business in this state, or is violating any provision of this division or any regulation or order adopted or issued pursuant to the division, the commissioner may, in the commissioner’s discretion, bring an action in the name of the people of the State of California in superior court to enjoin the act or practice or to enforce compliance with this division or any rule or order hereunder. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted and a receiver, monitor, conservator, or other designated fiduciary or officer of the court may be appointed for the defendant or the defendant’s assets, or any other ancillary relief may be granted as appropriate. A receiver, monitor, conservator, or other designated fiduciary or officer of the court appointed by the superior court pursuant to this section may, with the approval of the court, exercise any or all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court, by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the superior court.
(c) (1) If the commissioner determines it is in the public interest, the commissioner may include in any civil action authorized by subdivision (b) a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of a person injured by the act or practice constituting the subject matter of the action and attorney fees and costs, and the court shall have jurisdiction to award additional relief.
(2) In any civil action taken by the commissioner pursuant to subdivision (b), the commissioner may include a claim for civil penalties not to exceed twenty-five thousand dollars ($25,000) for each violation.
(3) No action shall be maintained to enforce any liability created under subdivision (b) unless brought before the expiration of four years after the act or transaction constituting the violation.
(d) The remedies provided by this section and by other sections of this division are not exclusive and may be sought and employed in any combination to enforce the provisions of this division.
26048.
 The commissioner may issue an order disenrolling an enrollee if, after notice and an opportunity for hearing, the commissioner finds that:
(a) The enrollee has failed to cooperate with examinations, investigations, surveys, questionnaires, or other fact-gathering efforts by the commissioner, including failing to submit its books, papers, and affairs to the inspection of any examiner.
(b) The enrollee has failed to submit to the commissioner any information, documents, updates, or reports required by this division or by regulation or order of the commissioner.
(c) The enrollee has willfully made or caused to be made in any document submitted to the commissioner under this division, or in any proceeding before the commissioner, or in any communication to the commissioner, any statement that was at the time, and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has willfully omitted to state any material fact that was required to be stated therein.
(d) The enrollee has failed to pay to the commissioner any fees, penalties, or other sums required by this division.
(e) The enrollee has failed to provide the disclosures and receipts required by Section 26022 or 26024 or has failed to comply with the prohibitions on advertising set forth in Section 26020.
(f) The enrollee has failed to comply with Section 26036.
(g) The enrollee has been permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from engaging in or continuing a digital currency business.
(h) The enrollee is or has been subject to an order, judgment, or decree of any court of competent jurisdiction finding that the enrollee has engaged in fraud, deceit, or other unfair and abusive business practices or finding there to be substantial evidence, a likelihood, or a probability of success on the claim, that the enrollee has engaged in fraud, deceit, or other unfair and abusive business practices.
26049.
 The commissioner may refer evidence available concerning any violation of this division or of any rule or order hereunder to the Attorney General, the Financial Crimes Enforcement Network of the United States Department of the Treasury, or the district attorney of the county in which the violation occurred, who may, with or without this type of a reference, institute appropriate proceedings under this division. The commissioner and his or her counsel, deputies, or assistants may, upon request of the Attorney General or the district attorney, assist the prosecuting attorney in presenting the law or facts at the trial.
CHAPTER  8. Operative Dates
26050.
 This division shall remain in effect only until January 1, 2022, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2022, deletes or extends that date.
SEC. 6.
 The Legislature finds and declares that Section 4 of this act, which adds Section 26030 to the Financial Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
In order to allow the Commissioner of Business Oversight of the Department of Business Oversight to fully accomplish his or her goals, it is imperative to protect the interests of those persons submitting information to the department to ensure that any personal or sensitive business information that this act requires those persons to submit is protected as confidential information.
SEC. 7.
 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.