(a) Except as provided in Section 3603, a covered person shall not exchange, transfer, or store a digital financial asset or engage in digital financial asset administration, whether directly or through an agreement with a digital financial asset control services vendor, if that digital financial asset is a stablecoin unless both of the following are true:
(1) The issuer of the stablecoin is an applicant, is licensed pursuant to this division, or is a bank, a trust company licensed
pursuant to Section 1042, or a national association authorized under federal law to engage in a trust banking business.
(2) The issuer of the stablecoin at all times owns eligible securities having an aggregate market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding stablecoins issued or sold.
(b) For purposes of this chapter:
(1) “Eligible securities” means the United States currency eligible securities described in subdivision (b) of Section
2082 or foreign currency eligible securities described in subdivision (c) of Section 2082 as required by the laws or regulations of other jurisdictions.
(2) “Nominal redemption value” means the value at which a digital financial asset can be readily converted, on demand at the time of issuance, into United States dollars or any other national or state currency or a monetary equivalent or otherwise accepted in payment or to satisfy debts denominated in United States dollars or any national or state currency.
(3) “Stablecoin” means a digital financial asset that is pegged to the United States dollar or another national currency and is marketed in a manner that intends to establish a reasonable expectation or belief among the general public that the instrument
will retain a nominal value that is so stable as to render the nominal value effectively fixed.
(Added by Stats. 2023, Ch. 792, Sec. 1. (AB 39) Effective January 1, 2024.)
(a) A covered person may exchange, transfer, or store a digital financial asset or engage in digital financial asset administration, whether directly or through an agreement with a digital financial asset control services vendor, if that digital financial asset is a stablecoin approved by the commissioner pursuant to subdivision (b), provided that the covered person complies with any requirements, restrictions, or prohibitions established by the commissioner pursuant to subdivision (c).
(b) (1) The commissioner may approve a stablecoin for exchange, transfer, or storage by a covered person, or for issuance pursuant to digital financial asset administration, if the commissioner determines that the stablecoin does not
compromise the interests of residents who may use the stablecoin as a payment for goods and services or as a store of value.
(2) In determining whether to make an approval under paragraph (1), the commissioner shall consider all of the following factors:
(A) Any legally enforceable rights provided by the issuer of the stablecoin to holders of the stablecoin, including, but not limited to, rights to redeem the stablecoin for legal tender or bank or credit union credit.
(B) The amount, nature, and quality of assets owned or held by the issuer of the stablecoin that may be used to fund any redemption requests from residents.
(C) Any risks related to how the assets described in subparagraph (B) are owned or held by the issuer that may impair the ability of
the issuer of the stablecoin to meet any redemption requests from residents.
(D) Any representations made by the issuer of the stablecoin related to the potential uses of the stablecoin.
(E) Any representations made by the issuer of the stablecoin related to the risks of using the stablecoin as payment for goods or services or as a store of value.
(F) Any other factors the commissioner deems material to making their determination.
(c) (1) As a condition of providing an approval pursuant to subdivision (b), the commissioner may require the stablecoin issuer to obtain a license under Section 3203 and may impose additional requirements, restrictions, or prohibitions on the activities of the issuer of the stablecoin in order to protect
the interests of residents who may use the stablecoin as payment for goods or services or as a store of value.
(2) The commissioner may impose additional requirements, restrictions, or prohibitions on the activities of a covered person exchanging, transferring, or storing an approved stablecoin or engaging in digital financial asset administration of an approved stablecoin, whether directly or through an agreement with a digital financial asset control services vendor, in order to protect the interests of residents who may use the stablecoin as a payment for goods or services or as a store of value.
(d) (1) The commissioner shall revoke an approval under subdivision (b) if, after notice and reasonable opportunity to be heard, the commissioner determines that the issuer of the stablecoin markets the stablecoin in a manner that may create a reasonable
expectation or belief among the general public that the stablecoin poses no more risk to a holder or user of the stablecoin than the risks posed to the holder or user of bank credit or a stored value product issued by a person licensed pursuant to Division 1.2.
(2) The commissioner may revoke an approval under subdivision (b) if, after notice and reasonable opportunity to be heard, the commissioner makes any of the following determinations:
(A) Changes in the activities of the covered person or the issuer of the stablecoin relative to the commissioner’s understanding of those activities when the commissioner made the approval may compromise the interests of residents who use or hold the stablecoin.
(B) Changes in market conditions within the financial system or within markets for digital financial assets relative to
the commissioner’s understanding of the financial system or the markets when the commissioner made the approval may compromise the interests of residents who use or hold the stablecoin.
(C) The covered person or the issuer violates any requirement, restriction, or prohibition imposed by the commissioner pursuant to subdivision (c) or any other provision, requirement, rule, or regulation under this chapter.
(e) If the commissioner approves a stablecoin pursuant to this section, the commissioner shall make available on the department’s internet website the approval.
(Added by Stats. 2023, Ch. 792, Sec. 1. (AB 39) Effective January 1, 2024.)