On February 27, 2015, Assembly Member Matthew Dababneh introduced AB-1326, a bill that seeks to "prohibit a person from engaging in this state in the business of virtual currency" without either a license or a special exemption from the State. This bill, and others which seek to raise the barriers to entry for bitcoin businesses, would harm both bitcoin consumers and entrepreneurs, and should therefore be withdrawn.

Consumers will be harmed because there will be less bitcoin companies competing for their business, which could lead to both increases in prices and decreases in service quality due to a lack of competition. Entrepreneurs will be harmed because the barrier to entry will be raised for those who wish to engage in the as-yet undefined "business of virtual currency." As just one example, AB-1326 seeks to impose upon entrepreneurs a non-refundable $5000 fee just to apply for the proposed license, to say nothing of the cost of the license itself and all subsequent compliance costs.

Mandatory, top-down, one-size-fits-all regulations such as those proposed in AB-1326 will squeeze out the small-time entrepreneurs who offer bitcoin services to their communities. Some of these entrepreneurs attend Buttonwood SF, a bitcoin trading meetup that I organize in San Francisco which currently has 261 bitcoin traders and counting. Most attendees are hobbyists, but many are professionals as well. If AB-1326 or another bill like it were to be signed into law, all such bitcoin trading meetups in California and the traders who do business there would have little choice but to cease operations, cutting off an accessible avenue for Californians to engage with this innovative and promising new technology.

In the year and a half that Buttonwood SF has been held, there has only been one dispute over money. This dispute was resolved not with government courts or regulations, but with private mediation and arbitration. To similar ends, trade organizations such as Bitcoin-OTC, the CryptoCurrency Certification Consortium, the Digital Asset Transfer Authority, and the Digital Currency Council are working on or are already offering to the public their own means of self-regulation for bitcoin professionals and organizations alike. These are meaningful and effective alternatives to mandatory licensing requirements, fulfilling the goals of consumer protection without the drawbacks that result from raising the barriers to entry for entrepreneurs.

In light of these facts, I am petitioning Assembly Member Dababneh to withdraw AB-1326, and further petition all current and future members of the California State Legislature to consider against introducing any similar legislation which would impose upon bitcoin businesses any regulation, registration, or licensing requirements. Please co-sign this petition and help save small bitcoin businesses in California. Thank you for your consideration.

References:

[*] http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1326

[*] http://www.meetup.com/Buttonwood-SF-P2P-Cryptocurrency-Trading/

[*] http://bitcoin-otc.com/trust.php

[*] https://www.cryptoconsortium.org/

[*] http://www.datauthority.org

[*] http://www.digitalcurrencycouncil.com/