Bitcoin

California Bitcoin Regulatory Bill Pulled by Its Sponsor

Now-dead bill would have regulated anyone who ever used Bitcoin, and video games with in-game digital currencies with real world value, as if they were a professional money transmitter.

|

California Assemblymember Matt Dababneh (D-Encino) had been floating a bill to regulate Bitcoin (A.B. 1326) one that aggravated many in the relevant virtual currency community.

EFF

Dababneh withdrew the bill last week. As he said in a written statement:

the current bill in print does not meet the objectives to create a lasting regulatory framework that protects consumers and allows this industry to thrive in our state. More time is needed and these conversations must continue in order for California to be at the forefront of this effort.

He's still very, very concerned about consumer risk, though, and threatens to approach the topic with a new bill next year.

Bitcoin News summed up concerns about Dababneh's initial approach:

New York's famous BitLicense regulation did a tremendous job of pushing the vast majority of Bitcoin startups out of the state. It left only one (Circle) to completely jump through the onerous set of flaming rings. Maybe that was the entire goal, to remove any future financial competition from the financial sectors incumbents?….

The Electronic Frontier Foundation (EFF) was proud of its role in helping turn Dababneh around on the matter. Some of their issues with his proposed bill:

….the bill's goal to protect consumers would have ironically been frustrated by the legislation, as it would have restricted access to currencies that benefit consumers in ways that non-digital currencies do not.

Many digital currencies allow individuals to directly transact with one another even when they do not know or trust each other. These currencies have significant benefits to consumers as they eliminate the third parties needed in non-digital transactions that can often be the sources of fraud or other consumer harm.

Further, intermediaries in traditional currency transactions, such as payment processers, are often the targets of financial censorship, which ultimately inhibits people's ability to support controversial causes or organizations.

Because the bill would have allowed California's Department of Business Oversight to determine which digital currency businesses operated in California, the government would have been deciding which currencies and businesses could be used, rather than consumers. This would have significantly limited Californians' digital currency options, to their detriment…..

EFF also felt the bill's drafting was based in misunderstanding of the world of digital currencies that would have led to some regulatory absurdities:

Take for example, a provision requiring anyone who transmits digital currencies to another person to register and comply with its complex regulations.

Digital currency users often directly transmit digital currency value to others without any intermediary, meaning those users would have been subject to the regulations even though they are merely using a digital currency….

The bill also would have required video game makers who offer in-game digital currency or goods to register, as the exemption for such activity is limited to items or currency that have no value outside of the game. The reality is that many items and currencies within games often have independent markets in which players buy, sell, or exchange items, regardless of whether a game maker allows for those transactions…

Advertisement

NEXT: Hillary's Emails and Trump's Deportation Reboot: Matt Welch on Tonight's Kennedy

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Democrats have never seen anything they don’t want to control. It is literally outside their entire belief system that people can have voluntary activities outside of their control.

    Or like how my proggy roommate thinks government is just an extension of us (“we”) and not coercion, while at the same time thinking that people are “forced” to shop at wallmart. So government is NOT force but private companies are — jesus fucking christ

    1. Your roommate feels forced by private companies because he knows, somewhere in the back of his mind, that he really does need what they offer — he can choose with whom he’ll do business, but he doesn’t have the choice of not doing business at all, assuming a certain standard of living to be non-negotiable.

      So his first mistake is that he reasons in half-thoughts; he feels forced, but doesn’t recognize that in the end, it’s really his own choice not to live in a hut, that is forcing him to do business with them.

      However, there is also another factor: to the degree that big business benefits from being in bed with the state, he is not incorrect in feeling that he is being held up with his own pistol. Which brings us to his second mistake: believing it possible to have a coercive state which does not ultimately end up being operated by those most fit to make use of its coercive power.

      This last can only be believed by those who do not do the math: politics is a competition, where fitness to rule is based not on who is the most virtuous, but on who is best suited to obtain power. That the honest do not lie is no advantage in such a competition. From this we can also derive the advice that, if government there must be, the more decentralized, the better.

  2. “The reality is that many items and currencies within games often have independent markets in which players buy, sell, or exchange items, regardless of whether a game maker allows for those transactions…”

    I knew it! The EFF is a front for Chinese gold farmers!

    1. “The reality is that many items and currencies within games often have independent markets”

      So?

      Really, so fucking what? Go fuck yourself Mr. Slaver

    2. I hope someone tells him about CS:GO/Dota item betting sites.

    3. Yeesh. Did I post on “No Sense Of Humor Monday”?

      1. “Chinese gold farmer” immediately nukes “humor”.

        1. Yes, it’s vely lacist

  3. the current bill in print does not meet the objectives to create a lasting regulatory framework that protects consumers and allows this industry to thrive in our state. More time is needed and these conversations must continue in order for California to be at the forefront of this effort.

    Shorter: We’re gonna get it right next time.

  4. I hope he got a couple hundred e-mails saying “Hey asshole: don’t fuck with something you don’t understand”, or words to that effect.

    -jcr

    1. He could then take a page out of Sarkesian playbook and set up an “I’m being harassed” Patreon account (Or I guess, since he’s a politician, a PAC).

  5. I’ve made $64,000 so far this year working online and I’m a full time student. Im using an online business opportunity I heard about and I’ve made such great money. It’s really user friendly and I’m just so happy that I found out about it. Heres what I do,

    ————— http://UsatodayJobs.Nypost55.com

  6. So if I understand this bill correctly, not only would it regulate things like Bitcoin, but also the gold and silver in my GoW account, or my kids Wizard 101, or Steam bucks etc.

    So I can’t even live in my anarchist fantasy world online now. When is that Orion ship leaving for Proxima Centauri?

  7. Facebook gives you a great opportunity to earn 98652$ at your home.If you are some intelligent you makemany more Dollars.I am also earning many more, my relatives wondered to see how i settle my Life in few days thank GOD to you for this…You can also make cash i never tell alie you should check this I am sure you shocked to see this amazing offer…I’m Loving it!!!!
    ????????> http://www.factoryofincome.com

  8. I might be supportive of a bill regulating digital currencies if we could go after the people who create these spamming accounts on comment boards!!
    (Tongue firmly planted in cheek)

Please to post comments

Comments are closed.