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AB-2150 Corporate securities: limited exemption: study.(2019-2020)



Current Version: 07/08/20 - Amended Senate         Compare Versions information image


AB2150:v96#DOCUMENT

Amended  IN  Senate  July 08, 2020
Amended  IN  Assembly  May 21, 2020
Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2150


Introduced by Assembly Member Calderon

February 10, 2020


An act to amend, repeal, and add Sections 25019 and 25531 of the Corporations Code, relating to corporate securities. relating to corporate securities.


LEGISLATIVE COUNSEL'S DIGEST


AB 2150, as amended, Calderon. Corporate securities: exception: digital assets. limited exemption: study.
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.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 (a) Pursuant to the requirements of this section, the Department of Business Oversight shall 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 proposed by Commissioner Pierce of the United States Securities and Exchange Commission, and report its findings to the Legislature.
(b) The study required by subdivision (a) shall provide for the participation of stakeholders from regulatory agencies, private industry, consumer protections groups, and blockchain advocacy groups. The study shall evaluate all of the following:
(1) The exemption’s potential benefits and costs to the state.
(2) The exemption’s potential impact on consumer protections.
(3) The appropriate minimum standards for businesses in order to qualify for the exemption.
(c) The report required by subdivision (a) shall be presented to the Legislature on or before January 1, 2022, and shall include, at a minimum, the following:
(1) Recommendations to the Legislature for enacting the exemption in California.
(2) Definitions of key terms necessary for the successful enactment of the exemption in California.
(3) Identification of concerns with the proposed exemption.
(4) Suggestions for regulatory frameworks that allow innovation and growth in blockchain and crypto currency technology while preserving consumer protections.
(d) (1) The report to be provided pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.
(2) This section shall remain in effect only until January 1, 2025, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2025, deletes or extends that date.