Virtual Currency – 10/04/19 -3

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IN REPLY REFER TO: _________

FILE NO: _________

October 4, 2019

Re: ________ – Opinion Request


Dear Ms.___________:

Thank you for your letter to the Department of Business Oversight (“Department”), dated April 25, 2019. As Senior Counsel for the Legal Division, I have been asked to respond to your request, which you submitted on behalf of your client, _______. Your client requests a determination by the Department regarding whether its anticipated business activities are subject to licensure under the Money Transmission Act.1

According to your letter, __________ plans to operate a “membership-based online platform … that seeks to enable non-profit organizations to receive cryptocurrencies as donations from individuals by providing tools to generate non-custodial cryptocurrency wallets, associate noncustodial existing wallets, and provide interfaces for placement on members’ website[s] to allow donors to easily initiate cryptocurrency donations.”  ____________ is also in the process of qualifying a Tier 2 Regulation A offering of _______ tokens with the U.S. Securities and Exchange Commission with the intention that the token serve “as a widely used cryptocurrency for charitable giving.” Aside from a membership fee, no fiat money (e.g., U.S. Dollars) is exchanged in or in relation to the online-donations platform.

The Department continues to study the cryptocurrency industry closely. Whether cryptocurrencies are a viable form of money or a speculative non-money asset is widely debated. Given this ongoing debate, the Department has not concluded whether cryptocurrencies are a form of money. Likewise, the Department has not determined whether services based solely on cryptocurrency transactions trigger the application of California’s banking or money transmission laws.

Accordingly, the Department is not requiring ______ to be licensed and supervised under the aforementioned laws at this time. Please be aware, however, that 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 any other state or federal laws not discussed in this opinion.

If you have any questions, please feel free to contact me at __________ or ___________.

Manuel P. Alvarez
Commissioner Department of Business Oversight

By  ____________
Mark Ahn
Senior Counsel

Robert Venchiarutti, Department of Business Oversight, San Francisco (via email)

____________, Principal, _____________________________

(via email:______________)

1 Fin. Code§ 2030, subd. (a).

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Last updated: Oct 14, 2019 @ 3:08 pm