The California “Grey Zone”

Bitcoin  •  CA DBO  •  Digital Currency  •  Regulatory Action

In the effort to bring digital currencies into the mainstream, companies are making concerted efforts to let consumers know that they are operating by the rules and with regulators’ blessings. One such company recently announced a bitcoin exchange. The exchange allows users to trade bitcoins and plans to first focus on the U.S. market. Several media outlets reported the launch, along with the claim that the exchange is regulated in 24 states, including California. A spokesman from a California regulatory organization publicly disagreed.

California’s Response

The California Department of Business Oversight responded that the exchange is neither licensed nor regulated in California, contrary to the claims of the exchange. However, Tom Dresslar, a CA DBO spokesman, stated that the exchange isn’t breaking the law by operating in California, but pointed out that there haven’t been any licenses issued for its operation within the state.

Jan Lynn Owen, the CA DBO Commissioner, added that they haven’t yet decided whether to regulate digital currency transactions, or the businesses that arrange such transactions, under California’s Money Transmission Act.

The Grey Zone

The exchange responded that licenses aren’t required in all states and that California, in particular, is currently in a “grey zone” while legislators nail down the state’s bitcoin regulations. So for now at least, it seems that the term “regulation” means different things to different people, perhaps depending which side of the (bit)coin you’re on.

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