Digital Currency Dealer
IN REPLY REFER TO: ________
FILE NO: ________
October 9, 2018
VIA E-MAIL AND U.S. MAIL
Re: Opinion Request –
Dear Mr. :
Thank you for your email dated April 8, 2018, to Stephen Lau, Assistant General Counsel in the Department of Business Oversight (“Department”). As Senior Counsel for the Legal Division, I have been asked to respond to this matter. Your letter requests confirmation that (“ ”) is not currently required to obtain a license under the California Money Transmission Act in connection with its business activities.
According to your email, is a Delaware corporation doing business under the name of ( ). is headquartered in Chicago, Illinois. is a digital currency dealer that specializes in the direct buying and selling of the digital currency . does not operate a peer-to-peer exchange. Instead, sells directly to individuals from its own inventory.
According to ’s business plan (“Plan”), is a decentralized cryptocurrency. That is, is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known. represents that is not controlled or issued by any central authority (e.g., large banks or mining hardware manufacturers) and can be mined by anyone profitably. The Plan also represents that was distributed without an ICO. (The Department understands the acronym “ICO” to refer to an initial coin offering.) The Plan further notes that is developed by “community members working as volunteers and the project is wholly funded by donations.”
The Department has been studying the cryptocurrency industry closely. Whether decentralized cryptocurrencies like are a viable form of money or a non-money asset is widely debated. Given this ongoing debate, the Department has not concluded whether decentralized cryptocurrencies are a form of money. Likewise, the Department has not determined whether a business that purchases and sells decentralized cryptocurrencies triggers the application of California’s money transmission law.
Accordingly, the Department is not requiring to be licensed and supervised under the aforementioned law at this time. But this is subject to change. At any time, the Department may determine that ’s activities are subject to regulatory supervision. The Department may also adopt regulations or issue interpretive opinions that significantly restrict ’s business operations. If chooses to operate in California, it would do so subject to these risks.
Nothing in this letter should be interpreted to relieve from any obligations under the laws administered by FinCEN or any other agency of the federal government.
Jan Lynn Owen
Department of Business Oversight
Jennifer L.W. Rumberger
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