California Lawmaker: Bitcoin Thefts Show Industry Regulation Needed

The state assemblyman behind efforts to regulate digital currency businesses in California is now hoping to revive his efforts.

AccessTimeIconAug 19, 2016 at 3:15 p.m. UTC
Updated Sep 11, 2021 at 12:27 p.m. UTC
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The state assemblyman behind efforts to regulate digital currency businesses in California cited the $65m hack of Bitfinex this week as evidence of the need for tighter industry controls.

In a statement issued following his state's decision to temporarily shelve further regulatory deliberations this year, he said that more time was needed to strike a balance between giving virtual currency businesses a firm foundation and ensuring consumers are protected.

Assemblyman Matt Dababneh said in the statement:

"Today, a user of virtual currency has no protection from loss, and businesses that use, transmit or store virtual currency live in an ecosystem of regulatory uncertainty. Potential harm to consumers is not some remote possibility, but has already happened."

Dababneh first proposed the bill last year shortly after becoming chairman of the state’s Banking and Finance Committee, and a revised version was once again introduced this year amid resistance from industry advocates.

In remarks, Dababneh credited conversations with "virtual currency experts, consumer organizations" as a deciding factor in the determination to suspend the proposed legislation until January of next year.

California’s regulatory effort follows New York's implementation of the so-called BitLicense, its controversial industry-specific licensing regime. That law, introduced in 2015, has been blamed for the departure of some digital currency startups from the state.

Overall, Dababneh sought to position the delayed bill as part of his state’s efforts to take a leadership position in the industry.

He concluded:

"Unfortunately, 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."

Image via TimeWarnerCable


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