Digital Currency Industry Regulation Plans Nixed in California

by Jim Hall

BitcoinDigital currency such as Bitcoin are a common form of online payment used around the world. The state of California recently shelved plans to regulate the industry involving digital currency, despite considering online gaming regulation.

In the online gambling industry, there are certain ways that players use when making a deposit or withdrawal. Common forms of payment include debit and credit cards, plus ewallets, all of which provide a secure way in which funds can be deposited into an online casino account as well as withdrawn. Digital currency options, such as Bitcoin, have become increasingly popular with online casino gamers as an easy way to fund accounts. The state of California has been considering for some time to regulate the digital currency industry of the state but have failed to see legislation move forward.

Why Regulate?

Digital currency is a relatively safe way to pay for items or to be paid. In California, many start-up companies had been created to offer bitcoin use, especially within the city of San Francisco. Such companies would have been set up and ready to offer such services if and when the state ever legalizes online gambling options. With legislation on the table, such start-ups were worried that they would have to go through a rigorous process of paperwork and regulations if the digital currency industry were to be regulated and controlled by the state government.

Legislation from 2015

Assembly Bill 1326 was created back in 2015 and has been under consideration for almost a year now. The bill is titled the California Bitcoin License and was reintroduced earlier this month by the Senate. Legislators have frozen the movement of the measure with the bill going back to the Rules Committee and Banking and Finance Committee. The bill is going to be delayed for this year.

The measure was first introduced by Matt Dababneh, a member of the Assembly, back in 2015. The bill has since seen several amendments in the Assembly and the Senate. Digital currency companies in the state are against the measure as they would have to follow regulations set by the state in regards to use the trade of digital currency. Reportedly, the bill is currently undergoing significant changes with several things to be modified, according to Mark Farouk, a spokesperson for the Banking and Finance Committee.

Favorable Legislation Could Work

The digital currency industry of the state could benefit from favorable legislation as the start-up sector is currently reaching investment heights of $300 million. Juniper Research is reporting that start-ups that work with bitcoin and the technology associated have already been able to create almost $300 million in funding during the first half of this year.

If legislation was created that would benefit the industry, then start-ups could thrive and easily continue offering services. It basically depends on what type of amendments are made to the current legislation and if legislators are in approval of moving the measure forward. Only time will tell what will happen in regards to digital currency in the state.

Where Does That Leave the Online Gambling Industry?

Online gambling, such as casino and poker game play, are still nonexistent within the state. If legislation were to be passed, regulations would be put in place as to what type of currency could be used for deposits and withdrawals. Bitcoin is commonly used in other parts of the world for such financial transactions. If the industry is regulated, it would make it a safe alternative for online casino gamers. However, the type of regulations put in place will matter significantly. It will be interesting to see if online gaming is considered in the amendment process when it comes to bitcoin regulation efforts within the state.