Existing law, the Corporate Securities Law of 1968, provides for the regulation of the issuance of corporate securities, requires the qualification of an offer or sale of securities, and provides for exemptions from qualification with the Commissioner of Business Oversight. Existing law defines a “security” to mean a note, stock, and, among other things, an investment contract. For the purposes of authorizing specified items that may be included in articles of incorporation, with regard to the keeping of certain records by a corporation that does not have outstanding securities listed on specified stock exchanges, existing law defines “blockchain technology” to mean a mathematically secured, chronological, and decentralized consensus ledger or database.
This bill would require the Department of Business Oversight to conduct a study to determine the feasibility of enacting in California a measure equivalent to the Proposed Securities Act Rule 195–Time-Limited Exemption for Tokens, as specified, and to report its findings to the Legislature. The bill would require the study to evaluate certain subjects, including the potential benefits and costs of the exemption to the state. The bill would require the department to present the report to the Legislature on or before January 1, 2022, would prescribe certain subjects that report is to include, and would specify the method of its delivery.
This bill, until January 1, 2026, would create an exception from the above definition by providing that a digital asset meeting specified criteria is presumptively not an investment contract within the meaning of a “security.” The bill would allow that presumption to be rebutted upon good cause shown by a preponderance of the evidence by the Commissioner of Business Oversight, as specified.
Existing law authorizes the
Commissioner of Business Oversight to make public or private investigations to determine if a person has violated or is about to violate any provision of the Corporate Securities Law of 1968 and, among other powers, to publish information concerning any violation of this law. Existing law authorizes the commissioner, in making an investigation, to take temporary possession of the books, records, accounts, and other papers pertaining to the business of any broker-dealer or investment adviser, as specified, and to administer oaths, subpoena witnesses, and take various other legal actions related to an investigation.
This bill would provide that the authority of the commissioner to investigate a person for a potential violation of the Corporate Securities Law of 1968 is not constrained by the rebuttable presumption described above. The bill would repeal these provisions on January 1, 2026.