Litigation

Ca. Litig. Rev. 2019

Virtual Currency

By Puneet V. Kakkar

Virtual currency-related issues percolated in almost every context in California state and federal courts in 2019—in the regulatory realm, actions commenced by the Securities and Exchange Commission, private class actions in the California superior courts, and in the criminal system. Last year’s California Litigation Review covered the basics on virtual currency, so those fundamentals are not repeated for this year’s review.1

California Regulators Continue to Debate the Implications of Virtual Currency in 2019

The California legislature was unsuccessful in enacting a law governing virtual currency businesses this past year. It remains an open question in California the extent to which virtual currency businesses must obtain state licenses to transact, in contrast to states such as New York, where certain persons or entities must obtain a BitLicense.2 In 2019, California legislators introduced a version of the Uniform Law Commission’s model act for virtual currency businesses,3 which would have, among other things, required persons or companies who have the "power to execute unilaterally or prevent indefinitely a virtual currency transaction" to obtain a license from the Department of Business Oversight.4 Though the bill was referred to the Assembly Committees on Banking and Finance and Privacy and Consumer Protection, the bill died as of January 31, 2020.5 Meanwhile, the Division of Financial Institutions of the Business Oversight Department has released opinion letters issued to various entities noting that though the Department "has been studying the cryptocurrency industry closely . . . the Department has not concluded whether Bitcoin and other cryptocurrencies are a form of money."6

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