THE SENATE COMMITTEE ON BANKING
AND FINANCIAL INSTITUTIONS WILL
COME TO ORDER GET AFTERNOON AS
WE CONTINUE TO TAKE SOME
PRECAUTIONS TO MANAGE ONGOING
COVID 19 RISK. THE SENATE
CONTINUES TO WELCOME THE PUBLIC
AND HAS PROVIDED ACCESS. TO BOTH
IN PERSON AND TELECONFERENCE.
PARTICIPATION FOR PUBLIC COMMENT
FOR INDIVIDUALS WISHING TO
PROVIDE PUBLIC COMMENTS VIA THE
TELECONFERENCE SERVICE. THE
PARTICIPANT, TOLL FREE NUMBER
AND ACCESS CODE IS POSTED ON OUR
COMMITTEE WEBSITE AND I WILL
ANNOUNCE IT NOW. TODAY'S
PARTICIPANT NUMBER IS 877226816
, AND THE ACCESS CODE IS 3063565
. I WILL MAINTAIN THE QUORUM
DURING THE HEARING, AS IS
CUSTOMARY AND ANY INDIVIDUAL WHO
IS DISRUPTIVE MAY BE REMOVED
FROM THE REMOTE MEETING SERVICE
OR HAVE THEIR CONNECTIONS
MOOTED. WE ARE HOLDING OUR
COMMITTEE HERE, HE IN THE O
STREET, AND I ASK ALL MEMBERS OF
THE COMMITTEE TO BE PRESENT IN
ROOM 20 SO WE CAN ESTABLISH
COURT AND BEGIN OUR HERE. I HAVE
CORAM SO WE WILL HOLD OFF ON
CALLING FOR COURTROOM, BUT WE
WILL BEGIN AS A SUBCOMMITTEE. IF
THAT IS OKAY WITH EVERYONE
PRESENT. UM AND BEEF. SO WITH
THAT, I THINK WE HAVE OUR FIRST.
AUTHOR HERE SO WE WILL BEGIN
WITH ASSEMBLYMEMBER'S GRAYSON.
UM AND WE WILL BEGIN WITH, UH,
SORRY 20 TO 69. I WAS GETTING
THE RIGHT NUMBER. THANK YOU SO
MUCH MEMBER, GRAYSON. THANK YOU
, MADAM CHAIR AND IT IS AN HONOR
TO BE BEFORE YOU AND THE
COMMITTEE TODAY. THANK YOU VERY
MUCH. I AM PLEASED TO PRESENT TO
YOU. ASSEMBLY BILL 22 69, WHICH
WILL HELP CREATE A SAFER AND
MORE SUSTAINABLE CRYPTOCURRENCY
MARKET FOR CALIFORNIA CONSUMERS.
IN CALIFORNIA BUSINESSES. FIRST
I WOULD LIKE TO THANK THE
COMMITTEE FOR THEIR FEEDBACK,
AND I DO ACCEPT THE PROPOSED
AMENDMENTS THAT ARE DETAILED IN
THE VERY THOROUGH ANALYSIS
PRODUCED BY COMMITTEE STAFF.
NEARLY EVERY DAY. SINCE I HAVE
BEEN CHAIR OF THE ASSEMBLY
BANKING COMMITTEE, THE ISSUE OF
CRYPTOCURRENCY HAS COME UP. THE
EXCITEMENT FOR THIS NEW DIGITAL
FINANCIAL PRODUCT IS PALATABLE,
AND I BELIEVE THE CRYPTO THAT
CRYPTO CURRENCY CAN BE A
PROPERLY. POSITIVE FORCE
FINANCIAL SERVICES. HOWEVER THE
MARKET TURMOIL IN RECENT MONTHS
HAS REVEALED A CRYPTOCURRENCY
MARKET THAT IS UNDER REGULATED.
AND SAFE AND RIGGED AGAINST
EVERYDAY CONSUMERS. THE
CRYPTOCURRENCY MARKET IS NOT A
HEALTHY MARKET TODAY, THERE ARE
NOW COUNTLESS STORIES ABOUT
INSIDER TRADING FRAUD, PERVASIVE
SERVICE OUTAGES, POOR CUSTOER
SERVICE AND SCAM PRODUCTS. AND
THAT'S NOT FORGET THE STORIES
ABOUT EVERYDAY PEOPLE, MANY OF
WHOM ARE WORKING CLASS WHO HAVE
LOST THEIR LIFE SAVINGS BECAUSE
THEY BELIEVED THE PROMISES MADE
BY CRYPTO BUSINESSES. I AM A
BELIEVER IN THE PROMISE OF NEW
TECHNOLOGY IN THE FINANCIAL
SERVICES, BUT THERE MUST BE
STRONG AND COMMON SENSE
REGULATION IN ORDER TO PROMOTE
SUSTAINABLE AND RESPONSIBLE
INNOVATION. MAYBE 20 TO 69
ACHIEVES EXACTLY THIS BY
REQUIRING THE LICENSOR OF
DIGITAL FINANCIAL ASSET CUP
COMPANIES THAT CALIFORNIANS USED
TO BUY, SELL AND TRADE THESE
DIGITAL FINANCIAL PRODUCTS. A B
22 69 WILL PROVIDE REGULATORY
CLARITY FOR AN INDUSTRY IN NEED
OF IT AND WILL INCLUDE CRITICAL
CONSUMER PROTECTIONS, SUCH AS
BOOSTING TRANSPARENCY THROUGH
NEW DIS NEW DISCLOSURES ABOUT
PRICES, FEES AND THE LICENSES.
HISTORY OF SERVICE OUTAGES.
IMPROVING CUSTOMER CONSUMER
TRUST IN CRYPTO BUSINESSES BY
REQUIRING CERTAIN LICENSES TO
ACT IN THE BEST INTEREST OF THE
CUSTOMER WHEN IT RECOMMENDS A
CRYPTO FINANCIAL PRODUCT. AND
PROTECTING CONSUMERS FROM THE
MOST RISKY DIGITAL FINANCIAL
ASSETS BY PROHIBITING CERTAIN
TYPES OF SO CALLED STABLE COINS
THAT HAVE BEEN REALLY THE SOURCE
OF RECENT MARKET CHAOS. AND THEN
FINALLY, I WANT TO THANK
INDUSTRY STAKEHOLDERS FOR THE
FEEDBACK THAT THEY HAVE SENT TO
ME IN RECENT DAYS. I BELIEVE WE
MUST ACT URGENTLY TO PUT IN
PLACE KEY PROTECTIONS FOR
CONSUMERS, AND I AM GRATEFUL
THAT THEY HAVE STEPPED FORWARD
WITH CONSTRUCTIVE FEEDBACK. I
LOOK FORWARD TO WORKING WITH
THEM IN THE COMING DAYS, WEEKS
AND MONTHS WITH THAT, I WOULD
LIKE TO INTRODUCE ROBERT HAROLD,
WHO WILL BE TESTIFYING ON
BEHALF. AT THE CONSUMER
FEDERATION OF CALIFORNIA THROUGH
THE CHAIR. THANK YOU. GOOD
AFTERNOON, MADAM CHAIR AND
MEMBERS I'M ROBERT CORELL,
EXECUTIVE DIRECTOR OF THE
CONSUMER FEDERATION OF
CALIFORNIA, WHERE THE SPONSORS
OF A B 22 69 1ST. I'D LIKE TO
THANK ASSEMBLYMEMBER'S GRAYSON
AND HIS STAFF WERE TAKING ON
THIS CRITICAL CONSUMER
PROTECTION ISSUE. WHAT APPEARS
TO BE A CROSSROADS MOMENT FOR
THIS INDUSTRY SECTOR. I'D ALSO
LIKE TO CONVEY TO YOU, MADAM
CHAIR IN YOUR STAFF A HEARTFELT
THANKS FOR A REALLY SUPERB
COMMITTEE ANALYSIS THAT
THOROUGHLY AND THOUGHTFULLY
WALKS THROUGH THE KEY ISSUES FOR
THE LEGISLATURE AND DOES SO IN A
CLEAR AND INSIGHTFUL WAY. THIS
AREA CAN FEEL VERY DENSE AND
TECHNICAL, AND THERE ARE
IMPORTANT ISSUES TO CONTEMPLATE
NO DOUBT ABOUT IT. BUT ITS CORE
. THIS BILL IS STRIKINGLY SIMPLE
. IT POSITS THAT DIGITAL
FINANCIAL ASSET BUSINESSES,
WHICH INCLUDES CRYPTOCURRENCIES,
KRYPTOS CHANGES AND THE LIKE.
SHOULD HAVE A SOLID FRAMEWORK
FOR LICENSURE AND REGULATION IN
ORDER TO PROTECT CONSUMERS YET
STILL ALLOW FOR IMPORTANT
INNOVATIONS. HERE'S WHY CONSUMER
PROTECTION MATTERS. JANUARY 22
REPORT BY CHAIN ANALYSIS OF
BLOCKCHAIN DATA PLATFORM
SUGGESTS THAT IN 2021 CLOSE TO
$14 BILLION US WAS SCAMMED FROM
INVESTORS USING
CRYPTOCURRENCIES. FOR EXAMPLE,
LAST YEAR, TWO BROTHERS MANAGED
TO DEFRAUD INVESTORS OF 3.6
BILLION FROM A CRYPTOCURRENCY
INVESTMENT PLATFORM. IN FEBRUARY
, THE FBI ANNOUNCED IT ARRESTED
A COUPLE WHO USED A FAKE
CRYPTOCURRENCY PLATFORM. TO
DEFRAUD INVESTORS OF ANOTHER 3.6
BILLION. THE LIST GOES ON AND
ON. HISTORY HAS SHOWN TIME AND
TIME AGAIN THAT MARKETS WORK
BEST WHEN THEY ARE ADEQUATELY
REGULATED AND INCLUDE VIGOROUS
ENFORCEMENT MECHANISMS TO ENSURE
CONSUMER PROTECTION AND THAT
MARKET PARTICIPANTS ARE WORKING
FOR THE BEST INTERESTS OF
CONSUMERS AND NOT JUST
THEMSELVES. CONSUMER PROTECTION
IN THIS AREA MUST NOT BE AN
AFTERTHOUGHT MENTIONED ONLY TO
TICK A BOX OR FOR A HANDY
SOUNDBITE. RATHER CONSUMER
PROTECTION MUST BE FRONT AND
CENTER OF THE WHOLE EFFORT TO
REGULATE AND SET FORTH FAIR AND
UNDERSTANDABLE RULES OF THE
ROAD. THIS IS IMPORTANT BECAUSE
CONSUMER CONFIDENCE IN THIS
INDUSTRY IS SORELY LACKING.
SURVEYS CONSISTENTLY SHOW THAT
EVEN THOSE CONSUMERS INVESTING
IN THIS INDUSTRY LACK CONFIDENCE
IN THE INDUSTRY. THOSE NUMBERS
ARE EVEN WORSE FOR THOSE NOT
INVESTING IN CRYPTO AND THE
NUMBERS HAVE DIMINISHED EVEN
FURTHER WHEN THE LATEST BUST
CYCLE OF THIS INDUSTRY BEGAN, AS
THE AUTHOR NOTED, IF YOU
INVESTED IN CRYPTO WHEN MATT
DAMON URGED YOU DURING THIS
YEAR'S SUPER BOWL TO GET IN,
BECAUSE QUOTE FORTUNE FAVORS THE
BRAVE UNQUOTE. YOU WOULD ALREADY
HAVE LOST WELL OVER HALF OF THAT
INVESTMENT, IF NOT MORE. FORTUNE
FAVORS A PROPERLY REGULATED
MARKET WITH SOLID RULES AND
STRONG ENFORCEMENT DOESN'T SOUND
NEARLY AS CATCHY, BUT IT IS FAR
FAR MORE ACCURATE. LEADING
INDUSTRY PARTICIPANTS KNOW THIS
, AND TO THAT END, MANY HAVE
ACTIVELY WELCOMED LAYING OUT
PROPER RULES OF THE ROAD BECAUSE
THEY KNOW THAT MANY CONSUMERS
HAVE LOST CONSIDERABLE SUMS AND
OUR WARIER THAN EVER ABOUT THE
INDUSTRY. MADAM CHAIR. I'D LIKE
TO CONCLUDE MY REMARKS BY
SPEAKING BRIEFLY ABOUT
NOMENCLATURE AND HOW IT MATTERS
IN AREAS LIKE THIS. I'M
REFERRING TO SO CALLED STABLE
COINS, AND THIS IS USED
DISCUSSED ON PAGE 19 OF THE
COMMITTEE ANALYSIS. GIVEN THAT
NAME STABLE COIN, IT IS
REASONABLE FOR A CONSUMER TO
ASSUME THAT THEY HAVE INVESTED
IN A STABLE COIN. IT IS PROPERLY
BACKED BY SOMETHING THAT KEEPS
IT STABLE. RESERVES IN U. S
DOLLARS OR EUROS. JAPANESE YOUNG
GOLD SOMETHING SIMILAR. YET THAT
IS NOT THE CASE FOR MANY STABLE
COINS. THOSE WHO INVESTED IN THE
LUNA TERRA, STABLE COIN FOUND
OUT THE HARD WAY WHEN THAT
STABLE COINS VALUE BASICALLY
DROPPED TO ZERO AND 40 BILLION
IN MARKET VALUE WAS WIPED OUT IN
JUST A FEW DAYS. MANY SMALLER
INVESTORS LOST EVERYTHING THEY
HAD. AND THAT'S STABLE COIN AND
WEREN'T AMUSED WHEN, SHORTLY
AFTER A NEW REPLACEMENT, STABLE
COIN CAME UPON THE MARKET.
THEORETICALLY WITH MORE
PROTECTIONS. IT WAS TOO LITTLE
TOO LATE FOR THOSE INVESTORS.
STABLE COINS, AND THERE ARE MANY
OF THEM THOUSANDS OF THEM IN THE
DIGITAL ASSETS MARKETPLACE
SHOULD BE BACKED BY SUFFICIENT
RESERVE ASSETS, CALLING
SOMETHING BY A NAME MEANT TO
IMPLY CONFIDENCE. DOESN'T MAKE
IT SO RESPECTFULLY. THE CONSUMER
FEDERATION OF CALIFORNIA
STRONGLY URGES AND I VOTE ON
THIS IMPORTANT CONSUMER
PROTECTION MEASURE. THANK YOU.
THANK YOU. AND BEFORE WE HEAR
FROM ANYBODY ELSE, I'D JUST LIKE
TO ESTABLISH QUORUM. IF WE CAN
CALL THE ROLL, PLEASE.
AH OKAY, SENATOR LIMÓN HERE ON
HERE, BUG. BRADFORD. BRADFORD
HERE, CABALLERO. DALLI DALLI
HERE, DURAZO. WES Ó. MEN. MEN
HERE, PORTANTINO. PORTANTINO
HERE. THANK YOU. WE HAVE WE HAVE
QUORUM AND NEXT WHAT WE WILL
HEAR FROM HEIDI PICKMAN FROM
CAMEO WHO WILL BE TESTIFYING THE
TELECONFERENCE LINE AND SUPPORT
OF THE BILL. GET AFTERNOON SHARE
. LIMÓN AND COMMITTEE MEMBERS
LIKE TO ALSO PYLON THAT THANK
YOU TO COMMITTEE STAFFER. CLEAR
ANALYSIS IS A VERY COMPLICATED
TOPICS. UM WE ARE PLEASED TO
SUPPORT 22 69. WHICH WILL HELP
MAKE CRYPTOCURRENCIES SAFER AND
MORE RELIABLE FOR CALIFORNIA'S
SMALL BUSINESSES AND CONSUMERS.
MANY SMALL BUSINESSES MAKE THEIR
BUSINESS DECISION DOESN'T
CONSUMER WOULD THEY MIGHT KNOW
THEIR FIELDS, BUT THEY'RE NOT
NECESSARILY FINANCING RULES.
LIKE ASSEMBLYMEMBER'S, GRAYSON
SAID. CRYPTOCURRENCY S
GENERATING A LOT OF BUGS. UM FOR
SMALL BUSINESSES, CRYPTOCURRENCY
CAN MAKE PAYMENTS FASTER, MORE
EFFICIENT AND THEY CAN BRING IN
CUSTOMERS OTHERWISE EXCLUDED
FROM TRADITIONAL BANKING SYSTEM.
SELECT AND REGIONAL CUSTOMERS.
HOWEVER SMALL BUSINESSES FACE
SIGNIFICANT CHALLENGES IN
CONDUCTING BUSINESS DIGITAL
CURRENCY. NEWS STORIES SUCH AS
ONE FOR ME, RAISES A RED FLAG,
CRYPTO CURRENCY CRASHES AND
BURNS BECOME ONE OF THE LARGEST
CRYPTO BANKRUPTCIES EVER. THE
BILLIONS OF DOLLARS THAT
INVESTORS HAD PUT INTO THAT
POINT. IT EVAPORATED. SO WHAT
HAPPENS TO THE SMALL BUSINESS
OWNERS WHO ARE ACCEPTING THAT
CRYPT EXPLAINS YOU CAN IMAGINE.
UM THE HIGH RATE OF FRAUD THAT
MR HARRELL REFERRED TO MAKE.
ACCEPTING CRYPTOCURRENCY VERY
RISKY. MANY BUSINESSES THAT
START ACCEPTING THE CURRENCY
STOPPED BECAUSE OF THE COST OF
FRAUDULENT ACTIVITY. BUSINESSES
AND THE ECONOMY ALSO SUFFER WHEN
THEIR CUSTOMERS LOSE THEIR FUNDS
FOR NO PROBLEM HAS IT IN THEIR
OWN BECAUSE THEY ARE VICTIMS OF
SCAMMER, NEFARIOUS ACTIVITY, AND
FURTHERMORE, THE VOLATILITY OF
THE CRYPTOCURRENCY TAIPEI'S MAKE
IT FINANCIALLY RISKY FOR ANY
BUSINESS TO RELY ON IT AS A FORM
OF PAYMENT. A B 22 69 WILL
CREATE MUCH NEEDED COMMON SENSE
OVERSIGHT OVER CRYPTOCURRENCY
OVER THE CRYPTOCURRENCY MARKET
RELATIONS PROGRAM ADMINISTERED
BY DSP I DEPARTMENT OF FINANCIAL
PROTECTIONS AND INNOVATION. AND
WOULD PUT IN PLACE CRUCIAL USER
PROTECTION AND HELP PREVENT BAD
ACTORS FROM TAKING ADVANTAGES OF
CUSTOMERS, CONSUMERS AND SMALL
BUSINESSES. BY DOING SO 20 TO 69
WILL HELP CONSUMERS AND SMALL
BUSINESSES SAFEGUARD THEIR WELL
EARNED MONEY AND REVENUES
CONTRIBUTE TO CALIFORNIA'S
ECONOMY WHILE ALLOWING
INNOVATION. I URGE YOUR VOTE ON
A B 20 TO 69. THANK YOU WITH
THAT WE WILL MOVE TO ANY
WITNESSES IN THE ROOM WHO WISH
TO TESTIFY IN SUPPORT OF THE
BILL. PLEASE JUST COME UP AND
STATE YOUR NAME AND
ORGANIZATION. SCENE NO WITNESSES
IN SUPPORT IN THE HEARING ROOM
MODERATOR. IF YOU WOULD PLEASE
PROMPT ANY INDIVIDUALS WITH
WISHING TO TESTIFY IN SUPPORT OF
A B 2269. WE WILL BEGIN. THANK
YOU, MADAM CHAIR IF YOU ARE IN
SUPPORT OF A B 22269 PLEASE
PRESS ONE FALL BY ZERO AT THIS
TIME, 1000 0 IF YOU'RE IN
SUPPORT OF A B 2269 AT ONE
MOMENT, WE DO HAVE ONE QUEUING
UP. ANYBODY ELSE. PLEASE TAKE
THIS OPPORTUNITY AND PRESS ONE,
FOLLOWED BY A ZERO. SHOULD BE
WITH US MOMENTARILY. THANK YOU
FOR YOUR PATIENCE, MADAM SHARE
WITH THE OPERATOR. LINE. 3 46,
PLEASE GO AHEAD. THANK YOU VERY
MUCH. HOLDEN WEISMAN FROM THE
GREENLINING INSTITUTE, CALLING
IN SUPPORT OF A B 22269 THANK
YOU VERY MUCH. AND OTHER
PARTICIPANTS HAVE QUEUED UP.
GREAT THANK YOU VERY MUCH.
MODERATOR HAVING HEARD FROM
WITNESSES IN SUPPORT, WILL NOW
USE THE SAME PROCESS TO HEAR
FROM ANY WITNESSES AND
OPPOSITION AND WE DO HAVE AS OUR
PRIMARY WITNESS AN OPPOSITION
JAMIE MINOR OF THE BLOCKCHAIN
ADVOCACY COALITION WHO WILL BE
TESTIFYING IN PERSON. THANK YOU
, CHAIR AND AUTHOR AND MEMBERS
OF THE COMMITTEE JAMIE MINOR ON
BEHALF OF THE BLOCKCHAIN
ADVOCACY COALITION. UM WHILE OUR
ORGANIZATION AND ITS MEMBERS ARE
GRATEFUL TO THE AUTHOR AND THE
COMMITTEE FOR ENGAGING IN THIS
IMPORTANT DISCUSSION ON THE
PATHWAY IN REGULAR TO REGULATE
THE CRYPTOCURRENCY INDUSTRY. WE
RESPECTFULLY MUST OPPOSE THE
BILL IN PRINT UNLESS AMENDED.
BLOCKCHAIN ADVOCACY COALITION
HAS ADVOCATED FOR THOUGHTFUL
REGULATION OF CRYPTOCURRENCIES
SINCE ARE UPSET INCEPTION. AND
NOW MORE THAN EVER, WE STAND
READY TO WORK WITH ALL
STAKEHOLDERS TO DEVELOP A
REGULATORY PATHWAY THAT BOTH
PROTECTS CONSUMERS, WHILE ALSO
NOT STIFLING THE INNOVATION AND
CONSUMER BENEFITS THAT CRYPTO
CAN OFFER. BEFORE WE DIVE INTO
THE BILL AT HAND. IT MIGHT BE
HELPFUL TO TAKE A STEP BACK AND
ACKNOWLEDGE THAT SOME OF THE
VALUES THAT TECHNOLOGY CAN BRING
TO SOCIETY CRYPTOCURRENCY AND
ITS LACK OF CENTRALIZED
AUTHORITY CAN LIFT UP THOSE
TRADITIONALLY ON AND UNDERBANKED
THOSE THAT MIGHT NOT HAVE TRUST
IN TRADITIONAL SYSTEMS OR THOSE
THAT ARE IN THE NEED OF ACCESS
TO CAPITAL WHERE THEY MIGHT
OTHERWISE BE TURNED AWAY. AT ITS
CORE CRYPTOCURRENCY PROMOTES
FINANCIAL EQUITY, ALLOWING
CUSTOMERS TO MOVE FINANCIAL
ASSETS AND A FAST, TRANSPARENT
AND OFTEN TIMES LESS EXPENSIVE
WAY. SO WHAT SUGGESTIONS DO WE
HAVE, AS WE WORK TOWARDS THE
SHARED GOAL OF REGULATORY
CLARITY FOR SUCH AN INDUSTRY.
FIRST OFF THIS SCOPE OF THE
BILL. THE LICENSE SHARE PROCESS
THIS BILL PROPOSES IS EXTREMELY
BROAD WITH INCREDIBLY COMPLEX
AND PERSPECTIVE, PRESCRIPTIVE
REPORTING REQUIREMENTS INSTEAD
OF THIS ONE SIZE FITS ALL
APPROACH TO CAPTURE A NUMBER OF
MODELS AND PRODUCTS IN THE
CRYPTO SPACE. IT IS OUR
RECOMMENDATION THAT D F P. I BE
GIVEN THE FLEXIBILITY TO REQUIRE
INFORMATION OR REPORTING
REQUIREMENTS SPECIFIC TO THE
PRODUCT AT HAND TO MEET THE
ADEQUATE LEVEL OF CONSUMER
PROTECTION AND THE DATA
GATHERING NECESSARY. DPI IS
ALREADY SPREAD THIN AS THEY OPEN
UP NEW DIVISIONS HIGHER SUBJECT
MATTER, EXPERTS IN THE FINTECH
SPACE AND IMPLEMENT THE AS
YOU'RE WELL AWARE CALIFORNIA
CONSUMER FINANCIAL PROTECTION
LAW, SO THEY SHOULD BE GIVEN THE
FLEXIBILITY TO TAILOR LICENSES
TO THE APPLE APPLICABLE PRODUCT.
THE SAME LOGIC APPLIES TO THE
EXPLICIT BAN OF NON RESERVE
ASSETS, STABLE COINS, ALSO KNOWN
AS ALGORITHMIC, STABLE COINS
CURRENTLY IN THE BILL, WHILE A
PARTICULARLY HIGH PROFILE
INCIDENT AS ALREADY MENTIONED,
UM IS WORTHY OF INTENSE SCRUTINY
AND INVESTIGATION BANNING THE
TECHNOLOGY OUT RIGHT AS IT
CONTINUES TO DEVELOP AND MATURE
DOES NOT ALLOW FOR CONTINUED
REFINEMENTS AND CONSUMER
PROTECTION. SO IT IS OUR
RECOMMENDATION THAT THE LANGUAGE
BE REFINED TO ALLOW D P D F P I
THE FLEXIBILITY TO AUTHORIZE
SUCH A TECHNOLOGY ONLY UNDER
SPECIFIC GUIDELINES, PROTECTIONS
AND AUDITING CAPABILITIES.
SECONDLY THE PROCESS AS
MENTIONED, GIVEN THE
PRESCRIPTIVE LANGUAGE OF WHAT
MUST BE INCLUDED IN A POTENTIAL
LICENSE TO ISSUE A DIGITAL
FINANCIAL ASSET. IT IS OUR
SUGGESTION THAT THE
IMPLEMENTATION AND APPROVAL OF
SUCH A LICENSE HAVE
ACCOUNTABILITY AND CERTAINTY AND
FLEXIBILITY FOR UNFORESEEN
ISSUES. THIS IS ESPECIALLY
IMPORTANT FOR SMALLER STARTUPS
THAT MIGHT NOT HAVE RESOURCES TO
MEET SUCH A HIGH REGULATORY AND
COMPLIANCE THRESHOLD CASE IN
POINT WHEN NEW YORK ADOPTED
THEIR BIT LICE BIT LICENSED IN
2015. THEY ONLY APPROVED 20
LICENSES IN SIX YEARS DESPITE
THE HUNDREDS OF ORGANIZATIONS
OFFERING SERVICES IN THIS SECTOR
, IT IS ESTIMATED THE COST OF
SECURING SUCH A LICENSE WAS OVER
$100,000 WAY OUT OF THE REACH
FOR MANY BUDDING COMPANIES, AND
THAT START UP PHASE. IN ADDITION
, AS WE'RE IN THE FBI DOES NOT
APPROVE OR DENY THE REGISTRANT
IN 31 DAYS, THE LICENSEE WOULD
BE DENIED WITH THIS AGGRESSIVE
TIMELINE AND WITHOUT A ROBUST
STAFF AND TEAM OF SUBJECT
MATTER. EXPERTS READY TO REVIEW
APPLICATIONS. BUSINESSES COULD
BE SHUT OUT OF THE MARKET AND
CALIFORNIA JOBS, TAX REVENUE AND
INNOVATION OPPORTUNITIES WILL BE
LOST. LASTLY WE LOOK FORWARD TO
WORKING WITH THE AUTHOR ON
REFINING THE DEFINITIONS AND
STANDARDS TO BE CONSISTENT WITH
OTHER STATES AND FEDERAL
LANGUAGE. AS SUCH AMBIGUITY,
AMBIGUITY WILL LEAD TO CONFUSION
AND COSTS AS COMPANIES ATTEMPT
TO COMPLY WITH BOTH BOTH STATE
AND FEDERAL REGULATIONS UNDER
BLUE SKY LAWS. BY WAY, EXAMPLE
OF EXAMPLE, DIGITAL FINANCIAL
ASSET BUSINESS ACTIVITY COULD
COVER BLOCKCHAIN ACTIVITY
OUTSIDE OF THE COMMERCIAL SPACE
, INCLUDING DECENTRALIZED
APPLICATION DEVELOPERS, NOT IN
THE BUSINESS OF ENCOURAGING
SPECULATION IN CRYPTOCURRENCY
TOKENS. ALSO THOSE IN THE
NONPROFIT AND GRANT DEVELOPMENT
SECTOR OR THOSE IN THE NON
FUNGIBLE TOKEN AND TEASE SPACE.
SO IN CLOSING. THIS INDUSTRY IS
RAPIDLY EVOLVING IN RESPONDING
TO CONSUMER NEEDS WHILE
PROVIDING VALUE AND INFLICT
ABILITY, LIKE WE'VE NEVER SEEN
BEFORE. WE APPRECIATE THE
AUTHORS COMMITMENT TO A
THOUGHTFUL DEBATE ON HOW SUCH AN
INNOVATION SHOULD BE REGULATED
AND STAND READY TO ENGAGE AND
BRING IDEAS TO THE TABLE.
HOWEVER HOWEVER, UNTIL SOME OF
THE ITEMS RAISED TODAY, OUR
ADDRESS WE MUST RESPECTFULLY
OPPOSED UNLESS AMENDED. THANK
YOU SO MUCH FOR YOUR TIME AND
CONSIDERATION. THANK YOU, MISS
MINOR ARE RIGHT. WE HAVE NO
OTHER LEAD WITNESSES IN
OPPOSITION, SO WE WILL MOVE TO
ANY INDIVIDUALS WISHING TO
TESTIFY AND SUPPORT IN THE
HEARING ROOM. I'M SORRY IN
SUPPORT AND OPPOSITION TO THE
BILL. IF YOU CAN PLEASE COME
FORWARD AND JUST STATE YOUR NAME
AND AFFILIATION. MADAM CHAIR AND
MEMBERS, COURTNEY JENSEN ON
BEHALF OF THE ELECTRONIC
TRANSACTIONS ASSOCIATION, E T. A
SUBMITTED A LETTER OF CONCERN.
UM SO WE DON'T HAVE AN OFFICIAL
POSITION AT THIS POINT, BUT WE
APPRECIATE THE CONVERSATION WE
HAD WITH THE AUTHOR THIS
MORNING. UM AND CONTINUED
CONVERSATIONS THAT WE KNOW WILL
HAVE THROUGHOUT THE JULY, UM,
TIMELINE, BUT WE JUST APPRECIATE
THE COMMENTS OF THE PREVIOUS
OPPOSITION WITNESS AND REFLECT
MANY OF THOSE CONCERNS. UM AND
LOOK FORWARD TO CONTINUE
CONVERSATIONS. THANK YOU. THANK
YOU ANY ADDITIONAL WITNESSES AND
OPPOSITION? DEFINITELY MADAM
CHAIR AND MEMBERS OF THE
COMMITTEE. MY NAME IS MICHAEL
MCGEE WITH MAJORITY ADVISORS
REPRESENT THE CRYPTO COUNCIL FOR
INNOVATION AND ITS MEMBERS,
WHICH INCLUDE COIN BASE, GEMINI
, FIDELITY, RIBBIT CAPITAL AND
RECENT HOROWITZ BLOCK PARADIGM
AND ELECTRIC CAPITAL. WHILE SISI
CURRENTLY DOES NOT HAVE A FORMAL
POSITION ON THE BILL, WE DO WANT
TO THANK THE AUTHOR OF A B 20 TO
69 HIS STAFF FOR TAKING A
MEANINGFUL STEP TOWARDS
PROVIDING THE REGULATORY CLARITY
AND CONSUMER PROTECTION THAT THE
DIGITAL ASSET INDUSTRY DOES
NEED. OUR MEMBERS SUPPORT ANY
MEASURES THAT INCREASE THE
SAFETY AND ACCOUNTABILITY OF
DIGITAL ASSET FINANCE FOR
CONSUMERS THAT ARE EXCLUDED FROM
TRADITIONAL LEGACY SYSTEMS, AND
WE COMMEND THE LEGISLATIVE
EFFORT HERE TO REACH THOSE ENDS.
GIVEN THE SIGNIFICANT SCOPE OF
THE BILL AND THE CURRENT
ENVIRONMENT AND THE DIGITAL
ASSET ECONOMY ALONGSIDE THE
GOVERNOR'S EXECUTIVE ORDER AND
THE FEDERAL ACTIONS PENDING ON
DIGITAL ASSET REGULATION. OUR
MEMBERS ARE STILL REVIEWING THE
BILL IN DETAIL AND HOPE TO
PROVIDE MEANINGFUL FEEDBACK. AS
SOON AS WE'RE ABLE TO FOURTH AND
FORWARD TO WORKING WITH THE
AUTHOR AND HIS STAFF ON THIS
EFFORT. THANK YOU. THANK YOU.
ALL RIGHT. NOW THAT WE'VE HEARD
FROM FOLKS HERE, WE WILL
ACTUALLY MOVE FORWARD TO, UH,
THE MODERATOR. IF THERE ARE ANY
WITNESSES AND OPPOSITION IF WE
CAN PLEASE PROMPT THEM, AND WE
WILL CONTINUE. THANK YOU, MADAM
CHAIR. IF YOU ARE IN OPPOSITION
TO 22 69, PLEASE TAKE THIS
OPPORTUNITY AND PRESS ONE,
FOLLOWED BY ZERO. ONE FALL BY
ZERO. MADAM CHAIR. NOBODY IS
QUEUING UP. ALRIGHT SEE NO
WITNESSES ON THE TELECONFERENCE
LINE IN OPPOSITION MEMBERS. WE
WILL MOVE IT TO COMMENTS AND
QUESTIONS, SENATOR MEN. THANK
YOU, MADAM CHAIR AND I WANT TO
THANK THE AUTHOR FOR BRINGING
THIS BILL FORWARD. UM, THE
PHILOSOPHER SANTAYANA ONCE SAID
FAMOUSLY, THOSE WHO CANNOT
REMEMBER THE PAST ARE DOOMED TO
REPEAT IT ROUGHLY 100 YEARS AGO,
WE LEARNED SOME INCREDIBLY
COSTLY LESSONS ABOUT THE PERILS
OF UNREGULATED BANKING AND
CAPITAL MARKETS. ASSET BUBBLES,
BANKING PANICS PANSY SCHEMES CAN
INVESTOR FRAUD. THESE WERE HARD
LEARNED LESSONS FROM OUR
PREDECESSORS. THEY LEAD TO THE
CREATION OF NEW LAWS AND
AGENCIES AND ROBUST FRAMEWORKS,
INCLUDING THE FEDERAL RESERVE.
THE FDA. SEE THE SEC, THE CFTC
WHOLE ALPHABET SOUP OF AGENCIES
AT THE FEDERAL AND STATE LEVELS.
UNFORTUNATELY TODAY, I THINK
THAT WE ARE RELEARNING THESE
VERY COSTLY LESSONS OF OUR
FOREBEARERS WHEN IT COMES TO
BANKING AND FINANCE. I WAS A
YOUNG, I GUESS. YOUNGER, MAYBE
BANKING POLICY ADVISOR IN
WASHINGTON D C WHEN WE
EXPERIENCED THE 2000 AND EIGHT
FINANCIAL CRISIS, WHICH OCCURRED
IN LARGE PART BECAUSE WE IGNORED
THE LESSONS OF OUR PREDECESSORS.
AND UNDERMINETHE INSTITUTIONS
THAT THEY HAD CREATED TO HELP
PROTECT US FROM BANKING PANICS
AND THE ECONOMIC HAVOC ACHING
CAUSE I FEAR THAT WERE AGAIN
IGNORING THE LESSONS OF THE PAST
, ALLOWING HUGE, UNREGULATED
SWATHS OF MARKETS IN OUR CAPITAL
MARKETS AND FINANCIAL PRODUCTS.
THERE'S A SAYING IN BANKING.
THERE ARE NO ATHEISTS IN
FOXHOLES AND NO LIBERTARIANS AND
FINANCIAL CRISES. UH AND I THINK
WE NEED TO MAKE SURE THAT WE
HAVE A REGULATED MARKET HERE. I
THINK BLOCKCHAIN AND DISTRIBUTED
LEDGER HAVE AN ENORMOUS
POTENTIALS TECHNOLOGIES AND WANT
TO MAKE SURE THAT WE ARE NOT
UNDERMINING THE POTENTIAL OF
THESE AND THE POTENTIAL GROWTH
THAT BEING SAID WE HAVE $1
TRILLION BITCOIN MARKET CAP
TODAY. THIS IS NOT A NASCENT
MARKET. IT'S TIME THAT WE STOP
TREATING THIS LIKE IT'S A
SANDBOX. THIS IS ENORMOUS AND
FAST GROWING MARKET THAT IS
REALLY POORLY UNDERSTOOD BY JUST
ABOUT EVERYONE. I TALKED TO, UH
, WHETHER IT'S POLICY MAKERS.
WHETHER IT'S CONSUMERS,
INVESTORS. PEOPLE JUST DON'T
UNDERSTAND HOW THIS WORKS, AND
YET THEY'RE INVESTING IN MASS. I
THINK WE NEED SOME KIND OF A
ROBUST FRAMEWORK HERE TO PROTECT
INVESTORS TO PROTECT OUR
FINANCIAL SYSTEM TO PROTECT OUR
ECONOMY. SYSTEMIC RISK INVESTOR
PROTECTION. THESE ARE CONCEPTS
THAT YOU KNOW THEY'RE NOT JUST
WORDS. THEY'RE IMPORTANT FOR
STABILITY OF OUR FINANCIAL
SYSTEM. AND SO I TAKE TO HEART.
THE COMMENTS MADE BY OPPOSITION
, I WOULD ENCOURAGE THE AUTHOR
TO CONTINUE WORKING WITH
OPPOSITION ALL STAKEHOLDERS TO
TRY TO MAKE THIS FRAMEWORK
BETTER. BUT I DO NOT THINK WE
SHOULD LET THE PERFECT BE THE
ENEMY OF THE GOOD HERE SO I WILL
SUPPORT THIS BILL. I PLOWED THE
AUTHOR FOR HIS EFFORTS AND I
WOULD MOVE THE BILL AT THE
APPROPRIATE TIME. THANK YOU. ANY
OTHER SENATOR DOLLY! THANK YOU.
WELL THERE'S A LOT IN THIS BILL.
THIS IS A GOTTEN HIM IN. FIRST
OF ALL, SO THERE'S BEEN NO
POLICY OR THIS THE FIRST ROUND
FOR US TO SEE THE POLICY, SO I
HAVE I HAVE SOME HAVE SOME
QUESTIONS FIRST OFF YOU KNOW? I
THINK THERE'S A AGREE WITH
SENATOR MAN. THERE'S A GREAT
NEED IN THE GREAT OPPORTUNITY
HERE FOR BLOCKCHAIN UNDOUBTED
NOBODY. NOBODY'S DISPUTING THAT
. I THINK THAT WE'VE SEEN THE
UPS AND DOWNS IN THE MARKET AND
YOU KNOW, STOCKS ARE MADE TO
INVEST IN AND YOU TAKE YOUR RISK
, WHETHER YOU'RE YOU KNOW, GONNA
MAKE MONEY OR NOT MAKE MONEY.
BUT AT THE END OF THE DAY, MY
QUESTION TO THE AUTHOR IS THIS
IS A THIS IS A NATION WIDE OR
EVEN GLOBAL. UH SCENARIO AND
WE'RE HERE IN CALIFORNIA TALKING
ABOUT WHAT WE'RE GOING TO DO
HERE. SO HOW HOW DOES THIS FIT
IN WITH LIKE UH, YOU KNOW,
OUTSIDE OF CALIFORNIA, AND
WHAT'S YOUR? WHAT'S YOUR
THOUGHTS ON THAT? IN THIS PIECE
OF LEGISLATION, SO THERE ARE
LESSONS ALREADY TO BE LEARNED
FROM WHAT TOOK PLACE IN NEW YORK
AND THEN ALSO WITH CONVERSATIONS
THAT ARE ALREADY TAKING PLACE
AND HAVE BEEN TAKING PLACE. A
WHILE IN IN ON THE FEDERAL LEVEL
IN WASHINGTON, AND THEN ALSO
LANGUAGE. MUCH OF THE LANGUAGE
THAT'S IN THIS BILL HAS ALREADY
EXISTED FOR MULTIPLE YEARS WE
JUST TOOK IT FROM DIFFERENT
SOURCES AND PUT IT INTO ONE
VEHICLE OR OR ONE NARRATIVE. UM
I THINK THAT GIVEN THE RECENT
LIFE OF THIS BILL, IT IS ALSO
CREATED AN ENVIRONMENT FOR
STAKEHOLDERS TO COME OUT AND SIT
AROUND THE TABLE AND ACTUALLY
HAVE A VERY MEANINGFUL
CONVERSATION. TO HELP CREATE
THAT FRAMEWORK AND TO HELP
CREATE THAT PLATFORM, FOR WHICH
MUCH OF THE NATION WILL LISTEN
TO AND FOLLOW. SO I THINK NOT
ONLY IS THERE AN OPPORTUNITY FOR
GREAT GREAT INNOVATION AND
CREATIVITY TO HAPPEN AS IT HAS,
AS WE IN CALIFORNIA HAVE A
REPUTATION, BUT THERE'S ALSO THE
OPPORTUNITY FOR US TO HELP GUIDE
THE CONVERSATIONS THAT DO TAKE
PLACE FROM STATE TO STATE AS
WELL AS WHAT TAKES PLACE ON THE
FEDERAL LEVEL. AND TO BE ABLE
TO, UH, TO HELP US CREATE THE
RIGHT POLICY WITH THE LEAST
AMOUNT OF UNINTENDED
CONSEQUENCES. SO WE HAVE IN THE
TRADITIONAL BANKING SYSTEM. WE
HAVE A GUARANTEE F D I C AND
OTHERS THAT ARE OUT THERE. AND
IN THIS IN THIS UH, WITH THIS
TECHNOLOGY AND THIS CURRENCY.
QUITE FRANKLY, WE DON'T HAVE
THAT. SO WHAT? WHAT? SHOW ME HOW
CALIFORNIA IS GONNA I'M STILL
HAVE THAT. I DON'T UNDERSTAND.
THIS SHOULD BE A FEDERAL LAW.
THERE SHOULD BE SOMETHING THAT
DONE AT THE FEDERAL LEVEL TO,
UH, TO PUT REGULATION. I DON'T
SEE HOW CALIFORNIA IS GONNA UM
WHICH WE DO ALL THE TIME WE
PASSED LAWS HERE ALL THE TIME
AND IN LEAD THE WAY
UNFORTUNATELY, I THINK SOME OF
THOSE LAWS ARE REALLY HORRIBLE
FOR NORTHERN CALIFORNIA BUT FOR
THE NATION AS WELL, BUT GIVE ME
THE NEXUS HERE. SO MAYBE YOU'RE
YES, I THINK MY WITNESS WILL BE
ABLE TO ALSO ADDRESS THIS. BUT I
DO WANT TO STATE THIS THAT
WHETHER THERE'S ACTION OR
INACTION ON THE FEDERAL LEVEL,
THERE ARE SOME THINGS THAT WE
CAN DO TO DRAW A STARTING LINE
ON THE STATE LEVEL AND ONE OF
THOSE IS TRANSPARENCY, VERY
SIMPLY CREATING TRANSPARENCY ON
WHAT ACTUALLY IS THAT CONSUMER
GETTING INVOLVED IN WHAT FEES?
AM I GOING TO PAY? WHAT ARE THE
DISCLOSURES THAT ARE THAT NEE
TO BE OUT THERE ABOUT THE
LICENSE HISTORY OF A PARTICULAR
SERVICES. SO UM, WE CAN CREATE
VERY SIMPLE. STATE LEVEL
PROTECTIONS FOR CONSUMERS, AS
WELL AS GUIDING THAT
CONVERSATION THAT I THINK THE
WITNESS WOULD BE ABLE TO ALSO
PROVIDE FOR THE COMMENT ON
SENATOR THANK YOU FOR THE
QUESTION. I THINK IT'S A VERY
THOUGHTFUL ONE. AND IT'S ONE
THAT WE HAVE BEEN CONTEMPLATED.
LET ME TRY TO APPROACH IT FROM
FROM TWO DIRECTIONS AND
HOPEFULLY THIS WILL BE
SUFFICIENT TO RESPOND. FIRST OF
ALL THE REASON THAT THE TIMING
IS NOW IS BECAUSE YOU'VE SEEN TO
SAY THIS IS A VOLATILE MARKET IS
THE UNDERSTATEMENT OF THE YEAR.
UM BUT THAT BUT THAT'S BECAUSE
PEOPLE ARE INVESTING THINKING
THEY'RE GOING TO MAKE MONEY.
THAT'S THE REASON IT'S FAULT OR
NOT, BECAUSE THE PRODUCT ISN'T A
GOOD PRODUCT. WELL WHAT? YOU
WHAT YOU LACK HERE? BIG PICTURE
ARE THE SORTS OF SAME GUARDRAILS
THAT YOU HAVE IN ALL THE OTHER
INDUSTRIES THAT YOU MENTIONED IN
THE PREMISE OF YOUR QUESTION.
THOSE ARE THE SORT OF BASIC
RULES OF THE ROAD THAT BY AND
LARGE, UH, THE AUTHOR SAID, UN
UNDER REGULATED AND I THINK WE
AGREE WITH THAT. IT'S NOT
UNREGULATED, BUT SIGNIFICANTLY
UNDER REGULATED THOSE RULES OF
THE ROAD. ALL THOSE THINGS THAT
WE HAVE IN OTHER INDUSTRIES THAT
WE KIND OF TAKE FOR GRANTED.
THEY'RE REALLY NOT THERE. HERE.
UM YOU MAKE A GOOD POINT ABOUT
STATE VERSUS FEDERAL. A NUMBER
OF STATES ARE ALREADY LEAPING IN
HERE AND UNFORTUNATELY WHAT
WE'RE SEEING IN SOME REGARDS AS
WHAT WE AND OTHER CONSUMER
ORGANIZATIONS REFER TO AS A BIT
OF A RACE TO THE BOTTOM. AND
THAT IS NOT A RACE THAT ANY
SMALL INVESTOR OR CONSUMER WINDS
UP WINNING. UM, SENATOR MAN, I
THOUGHT A DEPUTY POINTED THAT
OUT BASED ON OUR READING OF
HISTORY, SO WE WANT TO BE VERY
CAREFUL HERE. THERE'S BEEN A LOT
OF ACTIVITY. YOU'VE HAD A
FEDERAL EXECUTIVE ORDER BY
PRESIDENT BIDEN. YOU'VE HAD A
STATE EXECUTIVE ORDER BY THE
GOVERNOR. AND SO THE IDEA IS FOR
THE LEGISLATURE TO WEIGH IN HERE
WITH HELPING PRODUCE THAT
FRAMEWORK. I WAS JUST THE OTHER
THING. I WOULD JUST SAY SENATOR
IS I AM FORTUNATE ENOUGH TO
SERVE ON THE BOARD OF THE
CONSUMER FEDERATION OF AMERICA.
AND JUST AT A BOARD MEETING A
COUPLE WEEKS AGO, BACK IN D. C.
IT IS ABUZZ WITH THIS
CONVERSATION. THERE'S RELEVANT
FEDERAL LAW, BUT YOU ALSO HAVE A
THINK HERE IN CALIFORNIA A MUCH
MORE CLEAR PATH TO EFFECTIVE AND
APPROPRIATE REGULATION THAT
DOESN'T STIFLE INNOVATION.
BECAUSE AT THE FEDERAL LEVEL
YOU'VE GOT ABOUT A DOZEN GIVE OR
TAKE REGULATORY AUTHORITIES THAT
MAY OR MAY NOT HAVE A PIECE OF
THIS HERE. IT'S MUCH CLEANER AND
CLEARER AND, IN FACT, LITERALLY
THE LEGISLATION THAT THEN
ASSEMBLYMEMBER'S NOW SENATOR
LEHMAN AUTHORED. IS THE WHOLE
FRAMEWORK THROUGH WHICH WE CAN
THINK ABOUT THIS. AND I THINK
THAT ALL THAT TOGETHER I CAN
TELL YOU, MY COLLEAGUES IN OTHER
STATES THAT ARE WORKING ON
CONSUMER ISSUES. THAT WAS THE
NUMBER ONE QUESTION THERE ARE
VERY INTERESTED BECAUSE JUST
LIKE THE UNIFORM LAWS COMMISSION
CAME UP WITH A LOT OF THE
LANGUAGE THAT IS IN THIS BILL. A
LOT OF THE OTHER CONSUMER
ORGANIZATIONS THAT ARE WORKING
IN OTHER STATES WERE LOOKING TO
BE FOR SOMETHING POSITIVE TO
HELP PROVIDE THOSE GUARDRAILS.
HOPEFULLY, THAT'S RESPONSIVE TO
YOUR QUESTION. JUST SAY THAT,
AND I'LL JUST SAY THIS THAT YOU
KNOW, I DON'T PARTICULARLY CARE
ABOUT EXECUTIVE ORDERS. I THINK
A BODY OF LEGISLATORS MAKE
BETTER DECISIONS, WHETHER IT'S
HERE IN THIS BODY OR IT'S AT THE
FEDERAL LEVEL. F D I C WAS
BACKED BY GOLD. OUR COUNTRY WAS
BACKED BY GOLD AT ONE TIME. IT'S
NOT BACKED BY GOLD NOW IS BACKED
BY AN INSURANCE POLICY AND WE'VE
SEEN I WAS ON A HOUSING
AUTHORITY IN 2000. WHEN I SAW
THE HOUSING CRISIS AND WE WILL
MAKE THEY WERE MAKING LOANS TO
PEOPLE THEY SHOULDN'T HAVE MADE
LOANS TO, AND THAT WAS DONE BY
LEGISLATORS NOT NOT SO MUCH BY
BANKING. IT WAS IT WAS DONE BY
LEGISLATORS, SO I'M GOING TO LAY
OFF YOUR BILL. I REALLY THINK
THERE NEEDS TO BE SOME WORK
HERE. BUT I'M NOT CONVINCED THAT
IT'S UM IT'S WELL COOKED YET AND
SO I'M GOING TO LAY OFF I WANT I
DO THINK WE THERE IS SOME GREAT
OPPORTUNITIES. UM YOU KNOW, IN
IN IN THE WORLD, QUITE FRANKLY,
BECAUSE WE HAVE CURRENCIES IN
DIFFERENT CURRENCIES. AND IF WE
COULD COME UP WITH SOME
BLOCKCHAIN THAT WAS ACTUALLY
WOULD STABILIZE. I THINK YOU
KNOW, EVEN NATIONAL MARKETS
WOULD BE INTERESTING, I THINK IN
THE FUTURE SYSTEM FORWARD
THINKING, BUT I THINK THIS IS
REALLY A FEDERAL ISSUE MORE THAN
IT IS A STATE ISSUE, BUT
APPARENTLY, THEY'RE NOT LEAVING
IN THAT MANNER. SO I'M GONNA LAY
OFF AND JUST SEE WHAT HAPPENS.
THANK YOU. NEXT WE HAVE A
SENATOR HMAN. YEAH AND I
APPRECIATE THE QUESTION AND
COMMENTS AND I GUESS I WILL. I
JUST WANTED TO KIND OF WAY IN.
AH UNTIL THE FEDERAL GOVERNMENT
PASSED IN CONGRESS PASSED SOME
OF THESE LAWS THAT CREATED
FEDERAL INSTITUTIONS AND
PREEMPTED STATE LAWS. THE STATES
WERE THE ONES THAT WERE
PRIMARILY RESPONSIBLE FOR
REGULATING IN THESE SPACES. AND
I WOULD JUST RESPECTFULLY SUBMIT
THAT TODAY WE ARE IN AN
ANALOGOUS SITUATION WHERE UNTIL
THE FEDERAL GOVERNMENT COMES IN
AND SAYS, WE HAVE A PREEMPTIVE
SCHEME, THE STATES HAVE THE
RESPONSIBILITY TO STEP UP AND
PROTECT OUR CITIZENS. AND SO UM
, YOU KNOW, I GUESS I WOULD URGE
MY COLLEAGUES TO CONSIDER VOTING
FOR THIS JUST BECAUSE UNTIL THE
FEDERAL GOVERNMENT COMES IN AND
THERE'S A POSSIBILITY SEC IS
CONSIDERING A FRAMEWORK. IT'S
POSSIBLE THAT THE FEDERAL
GOVERNMENT WILL PREEMPT WHATEVER
WE DO. BUT I DON'T THINK WE CAN
JUST WAIT TO SEE WHAT THE
FEDERAL GOVERNMENT DOES,
PARTICULARLY AT A TIME WHEN
CONGRESS IS KIND OF CLEARLY
EVENTS THAT THEY'RE NOT CAPABLE
OF BOLD ACTION IN ANY SPACE.
THANK YOU. ALL RIGHT. SO YOU
KNOW ADDITIONAL COMMENTS. I'M
GOING TO ACTUALLY START OFF BY,
UH, THE COMMITTEE ANALYSIS HAS
BEEN REFERENCED A COUPLE OF
TIMES. AND SO THAT WAS
DEFINITELY NOT A 21 PAGE COFFEE
READ, UM, AND SO IT WAS
SUBSTANTIAL. IT WAS VERY, VERY
THOROUGH. AND SO I'M VERY
APPRECIATIVE OF IT. AND I WOULD
LIKE TO THANK THE AUTHOR FOR
BRINGING THIS BILL FORWARD. I
THINK IT'S BECOME THIS, YOU KNOW
, TECHNOLOGY HAS BECOME MUCH
MORE MAINSTREAM. UM AND I THINK
IT HAS BEEN NOTICED. IT'S NO
LONGER A SMALL PART MARKET. IT
IS NOT, UH, YOU KNOW A TOOL.
THIS IS REALLY A GLOBAL TOOL
THAT WE'RE THINKING ABOUT. BUT
IT'S ALSO UM AS X COME WITH A
LOT OF EXCITEMENT. AND POTENTIAL
FOR OPPORTUNITY. THERE'S ALSO
BEEN SOME SOME LEVEL OF CONCERN
, UM WHEN PRICES COME CRASHING
DOWN, I THINK WHEN PRICES ARE
HIGH, WE SEE THAT IT'S EASY FOR
FOLKS TO KIND OF OVERLOOK SOME
OF THE LIMITATIONS THAT THERE
COULD BE IN THIS PRODUCT AND
ALSO POTENTIALLY LEAVE SOME
CONSUMERS VULNERABLE TO LOSING.
ASSETS FOR THEMSELVES. I THINK
OVER THE LAST FEW MONTHS WE'VE
DEFINITELY SEEN A LOT YOU KNOW,
IN THIS PARTICULAR SPACE AND
ALSO THE NEED TO BRING SOME OF
THIS FORWARD. I THINK THAT IF
ANYTHING, WATCHING WHAT'S
HAPPENED IN THE LAST FEW MONTHS
IS REALLY EVIDENCE FOR WHY THE
STATE CAN TAKE APPROPRIATE
ACTION AND I WILL SAY THAT UM,
WHAT YOU HAVE IN YOUR BILL ARE
ELEMENTS AS YOU'VE IDENTIFIED
THAT APPLY TO THEIR VERY BASIC
CONSUMER PROTECTIONS THAT WE
APPLY TO OTHER PRODUCTS IN THE
STATE WHERE WE KNOW, UM FEDERAL
PREEMPTION HAS ALLOWED FOR
STATES TO TAKE THIS ROLE, I
THINK. SHOULD THE FEDS EVER OR
WHEN THEY ACT ON THIS. I THINK
THAT THE STATE OF CALIFORNIA
WILL BE READY. WHAT MAKES US
UNIQUE IS THAT WE DO HAVE A
STATE AGENCY THAT ALREADY IS
LOOKING AT SOME OF THESE
PRODUCTS AND THAT IS DESIGNED TO
LOOK AT THE INNOVATION AS WELL
AS THE CONSUMER PROTECTIONS THAT
IS, BOTH OF THOSE THINGS ARE IN
THE TITLE OF THE STATE AGENCY,
AND I THINK THAT'S REALLY
IMPORTANT. I FEEL LIKE THIS BILL
ACTUALLY PROVIDES AN OPPORTUNITY
FOR INDUSTRY AND THE WAY THAT IT
PROVIDES AN OPPORTUNITY FOR
INDUSTRY. IS THAT IT GIVES US A
BIT OF A FRAMEWORK I THINK
WORKING WITH, YOU KNOW INDUSTRY
TO DEVELOP WHAT THIS COULD
POTENTIALLY LOOK LIKE. WE KNOW
THAT VERY OFTEN. WHAT HAPPENS IN
CALIFORNIA GETS REPLICATED IN
OTHER STATES, BUT WE REALLY DO
HAVE BOTH PIECES IN MIND
CONSUMER PROTECTIONS AS WELL AS
INNOVATION, AND I THINK THAT'S
REALLY IMPORTANT. UM AND I DO
WANT TO RECOGNIZE THAT WE HAVE
NOT RECEIVED SPECIFIC. WE'VE
RECEIVED A LETTER OF CONCERN,
BUT WE HAVE NOT RECEIVED AT
LEAST THIS COMMITTEE DID NOT
RECEIVE ANY SPECIFIC AMENDMENTS
. UM SO IT'S MY HOPE THAT AS
THIS BILL MOVES FORWARD IF THERE
ARE SPECIFIC AMENDMENTS, AS
OPPOSED TO BROAD, YOU KNOW,
GENERALITIES THAT WE'RE ABLE TO
REALLY? YOU KNOW, WORK ON THOSE
AND SEE WHAT IT WOULD TAKE FOR
OUR STATE TEND TO MOVE IN THIS
DIRECTION. I THINK SOME OF THIS
IS OVERDUE. GIVEN THE SIZE OF
THIS, BUT I ALSO BELIEVE THAT
IT'S IMPORTANT TO MOVE THIS BILL
FORWARD AND CONTINUETHE
CONVERSATION AND DIALOGUE. I
THINK THAT THIS IS EXEMPLARY IN
US TAKING A VERY PROACTIVE STEP.
IN THIS STATE TO SAY, LOOK,
WE'RE WILLING TO WORK WITH FOLKS
WERE WILLING TO PROVIDE SOME
BASIC, YOU KNOW, CONSUMER
PROTECTIONS, AND WE HAVE AN
AGENCY TO DO THAT. UM AND WITH
THAT IN MIND, I WOULD YOU KNOW,
IF APPROPRIATE, AND WHEN
APPROPRIATE WOULD LIKE TO BE
CONSIDERED AS A CO AUTHOR. AND
WE HAVE ONE MORE COMMENT.
SENATOR GRASSO, JUST A QUICK
THANK YOU TO THE AUTHOR. UM AND
THANK YOU TO THE CONSUMER
FEDERATION. I MEAN, WHAT DO I
KNOW ABOUT THIS STUFF? UM AND
MOST PEOPLE I THINK ARE KIND OF
LIKE ME IS WHAT DO I KNOW ABOUT
THAT? IT'S JUST YOU KNOW, THESE
HEADLINES THAT I READ ABOUT
DON'T MISS OUT. THIS IS YOUR
OPPORTUNITY. UM, STABLE COIN. I
MEAN, THESE ARE TERMINOLOGY THAT
COULD GET YOU PRETTY EXCITED AND
TAKE RISKS THAT ARE JUST NOT
GOOD TO TAKE. SO ANYWAY, I JUST
WANT TO THANK YOU ALL. THANK
YOU. SO WITH THAT WE DO HAVE
EMOTION BY SENATOR MEN AND I
WILL ALLOW YOU TO CLOSE AND THEN
WE'LL CALDERON. THANK YOU, MADAM
CHAIR FOR YOUR COMMENTS AND
THANK YOU TO COMMITTEE MEMBERS
FOR YOUR COMMENTS AS WELL AS
QUESTIONS AS YOU COULD TELL FROM
THE TESTIMONY TODAY, THERE IS
GOING TO BE AMPLE OPPORTUNITY
FOR US TO BE ABLE TO CARRY ON
DISCUSSIONS. AND HAVE LIVELY,
ROBUST DEBATES AND TO BE ABLE TO
HAVE AMPLE OPPORTUNITY TO WORK
WITH THIS BILL, AS WE MOVE IT
FORWARD, AND WITH THAT, I WANT
TO THANK EACH AND EVERYONE OF
YOU FOR YOUR CLOSE
CONSIDERATION. RESPECTFULLY ASK
FOR MY VOTE. THANK YOU, SO WE'LL
GO AHEAD AND CALL THE RULE.
ASSEMBLY BILL 22 69 MOTIONS DO
PASS AS AMENDED BUT FIRST AMEND
AND RE REFERRED TO THE COMMITTEE
ON JUDICIARY, SENATOR LIMÓN
LIMÓN I TO A BUG. BRADFORD
REDFORD. I CABALLERO I DOLLY!
DURAZO AYE, HUESO. MEN MEN. I
PORTANTINO PORTANTINO. AYE. RIB
SIX. YOU HAVE SIX VOTES, AND
WE'LL LEAVE THAT ON CALL FOR ANY
MEMBERS. THANK YOU, MADAM CHAIR
. LOOK FORWARD TO HAVING YOU ON
THIS. GREAT. THANK YOU. AND NEXT
AS AS WE HAVE ASSEMBLYMEMBER'S
HOLDING COME UP, I'M GOING TO
ASK IF WE CAN ACTUALLY CALL THE
ROLE FOR THE CONSENT CALENDAR.
WE HAVE A B 2000 AND ONE ON
CONSENT. IF WE HAVE A MOTION SO
MOVED ITS MOVED BY SENATOR
BRADFORD MOTION IS TO ADOPT THE
CONSENT CALENDAR. SENATOR LIMÓN
I KNOW BUG BRADFORD BRADFORD, I
GOTTA PIERROT D¯úI DOLLY!
FINALLY I DURAZO H
N. I PORTANTINO PORTANTINO.
AYE. SEVEN RIGHT THAT HAS SEVEN
VOTES, AND WE'LL LEAVE THAT OPEN
FOR MEMBERS TO ADD ON NEXT WE
WELCOME ASSEMBLYMEMBER'S HOLDEN
, YOU MAY PRESENT YOUR BILL A B
676. THANK YOU, MADAM CHAIR AND
MEMBERS TODAY I PRESENT A B 6 76
BIPARTISAN BILL. THAT WILL TAKE
A NUMBER OF STEPS TO RECTIFY THE
UNBALANCED RELATIONSHIP BETWEEN
FRANCHISEES AND FRANCHISORS IN
2015. I AUTHORED A B 25 25.
MAKING CALIFORNIA THE STANDARD
BEARER OF FAIRNESS FOR THE
FRANCHISOR AND FRANCHISEE
RELATIONSHIP. BECAUSE OF MY OWN
EXPERIENCE AS A FRANCHISEE IN
THE STORIES I'VE HEARD FROM
CURRENT FRANCHISEES, WHILE
IMPROVEMENTS HAVE BEEN MADE,
2020 HAS SHOWN US THAT THERE'S
STILL MORE WORK TO DO TO BRING
FAIRNESS. TO THE SYSTEM. BETWEEN
ADVOCATING RESPONSIBILITIES TO
FRANCHISEES DURING THE COVID 19
PANDEMIC AND REVELATION OF
UNFAIR TREATMENT OF FRANCHISEES
OF COLOR. TIME HAS REVEALED THAT
MORE ISSUES NEED TO BE
ADDRESSED. THIS BILL DOES
MULTIPLE THINGS TO RESOLVE THESE
ISSUES. IT EXPLICITLY PROHIBITS
FRANCHISORS FROM INFLUENCING
WHERE FRANCHISEE CAN PURCHASE OF
FRANCHISE BASED ON A PROTECTED
CLASS SUCH AS RACE, WHICH HAS
BEEN THE SUBJECT OF ONGOING
LAWSUITS AGAINST MCDONALD'S. BY
AFRICAN AMERICAN FRANCHISEES.
SOME FRANCHISORS HAVE USED THE
PANDEMIC AS AN OPPORTUNITY TO
CHANGE THEIR LIABILITY TO
TRANSFER BURDEN ONTO FRANCHISEES
IN EXCHANGE FOR FINANCIAL HELP.
THE BILL PROHIBITS THAT
CURRENTLY, FRANCHISORS CAN
UNILATERALLY DETERMINE THE
AMOUNT OF FRANCHISE THE Ó WHEN
AN AGREEMENT IS BEING TERMINATED
OR NON RENEWED. THIS BILL
CREATES A MORE FAIR PROCESS
WHERE BOTH PARTIES HAVE A SAY.
TRANSFER BUYER OF A FRANCHISE
THAT WAS ESTABLISHED BEFORE 2016
WILL NOT RECEIVE THE PROTECTIONS
ESTABLISHED BY A B 5 25, EVEN
THOUGH THEY ARE SIGNING A NEW
FRANCHISE CONTRACT. AFTER THE
LAW'S ENACTMENT. THE BILL
ENABLES THAT. IT WILL ALSO
INCLUDE ADEQUATE DISCLOSURES AND
ENSURE THAT ALL FRANCHISES AND
FRANCHISEES IN CALIFORNIA ARE
COVERED BY THE LAW. WITH ME TO
TESTIFY TODAY IS KEITH R. MILLER
OWNER SUBWAY, GRASS VALLEY AND
AUBURN, CALIFORNIA. PRINCIPAL
FRANCHISEE ADVOCACY CONSULTING.
THANK YOU. AND IRESPECTFULLY
ASK FOR YOUR VOTE. THANK YOU.
ALL RIGHT, SO NOW WE HAVE, UH,
KEITH MILLER ON THE
TELECONFERENCE LINE. MODERATOR,
WILL YOU PRIEST? UH, PROMPT
KEITH MILLER. IF YOU'RE READY,
KEITH. OKAY? GREAT THANK YOU,
MADAM CHAIR AND MEMBERS OF THE
COMMITTEE. THANK YOU FOR YOUR
TIME TODAY AND THANK YOU.
ASSEMBLYMEMBER'S HOLDEN FOR
TAKING THE LEAD ON THIS BILL IN
MY NAME IS KEITH FELLER. I'M
HERE TODAY TO SUPPORT MAYBE 676.
ON BEHALF OF ITS TO SPONSOR THE
FRANCHISEE ADVOCACY CONSULTING
AND THE AMERICAN ASSOCIATION OF
FRANCHISEES AND DEALERS. I'M
ALSO HERE REPRESENTING THE ASIAN
AMERICAN HOTEL OWNERS
ASSOCIATION. PROBABLY MOST
IMPORTANTLY, AS THE
ASSEMBLYMEMBER'S, SAID, I'VE
BEEN A SUBWAY FRANCHISEE IN
CALIFORNIA, 1988, CURRENTLY WITH
THREE LOCATIONS AND GRASS VALLEY
AND ROBERT I WALKED. COVER THAT
THE PARTS OF THE BILL, I THINK
THE ASSEMBLY MEMBER COVERED
THOSE JUST FINE. I JUST WANT TO
POINT OUT THAT THERE IS NO
OPPOSITION TO THE BILL.
INITIALLY THE INTERNATIONAL
FRANCHISE ASSOCIATION HAD SOME
BETTER TO LETTER OF CONCERN TO
THE ASSEMBLY. AND THEN AFTER WE
WENT THROUGH THE ASSEMBLY WITH
BIPARTISAN SUPPORT, UNANIMOUS
AND ALL COMMITTEES IN 63 TO 1
VOTE ON THE FLOOR. AND EVEN WITH
THAT BOAT, WE CONTINUED
DISCUSSION WITH THE FIFA AND
TOOK MANY AMENDMENTS WERE WHICH
WERE REFLECTED IN THE MAY 26TH
AMENDED VERSION. WITH THOSE
AMENDMENTS, THE FAA HAS REMOVED
ANY CONCERN WITH THE BILL AND
TAKEN A NEUTRAL STANCE. SO UH,
WITH THAT, AND PASSING THE LAST
COMMITTEE AND SENATE UNANIMOUSLY
I ASKED FOR YOUR I VOTE. ON THIS
BIPARTISAN BILL. THANK YOU.
THANK YOU. UM, NOW, HAVING HEARD
FROM MR MILLER WE WILL BEGIN
WITH ANY WITNESSES HERE IN THE
ROOM WISHING TO TESTIFY AND
SUPPORT. SEEING NONE. MODERATOR
CAN YOU PLEASE PROMPT ANY
WITNESSES WILLING TO TESTIFY AND
SUPPORT OF ASSEMBLY BILL 676 ON
THE PHONE LINES, PLEASE? THANK
YOU MUCH, MADAM CHAIR. IF YOU
ARE IN SUPPORT OF A B 676,
PLEASE TAKE THIS OPPORTUNITY AND
PRESS ONE, FOLLOWED BY ZERO.
ONE, FOLLOWED BY ZERO. AND MADAM
CHAIR. NOBODY IS QUEUING UP THIS
TIME. ALRIGHT, SEE, NO ONE ON
THE PHONE LINES WILL GO AHEAD
AND FOLLOW THE SAME PROCESS FOR
WITNESSES AND OPPOSITION. THIS
BILL DOES NOT HAVE ANY
REGISTERED OPPOSITION. DO WE
HAVE ANY WITNESSES AND
OPPOSITION IN THIS HEARING ROOM?
SEEN THEN. MODERATOR CAN YOU
PLEASE PROMPT ANY WITNESSES
WISHING TO TESTIFY IN OPPOSITION
OF A B 676 AND WILL BEGIN SHE
WOULD LIKE TO EXPRESS OPPOSITION
TO A B 676 PLEASE PRESS ONE
FOLLOWED BY ZERO AT THIS TIME.
ONE FOULED BY ZERO. AND NOBODY
IS QUEUING UP ALRIGHT WITH NO
WITNESSES VIA THE TELECONFERENCE
LINE IN OPPOSITION MEMBERS WILL
BRING THIS BACK TO THE DIOCESE.
ANY QUESTIONS, COMMENTS,
CONCERNS OR EMOTIONS. THANK YOU,
SENATOR DOLLY MOVES THE BILL AND
THANK YOU ASSEMBLYMEMBER'S
HOLDEN FOR BRINGING THIS
FORWARD. WOULD YOU LIKE TO
CLOSE? RESPECTFULLY ASK FOR YOUR
VOTE. THANK YOU. ALL RIGHT. IF
WE CAN PLEASE CALL THE ROLL FOR
ASSEMBLY BILL 676. THE MOTION IS
DUE PAST BUT FIRST RE REFERRED
TO THE COMMITTEE ON
APPROPRIATIONS. THE MOTION IS
DUE PASS. BUT FIRST WE REFER TO
THE COMMITTEE ON APPROPRIATIONS
. SENATOR LIMÓN. AYE, COBURG.
BRADFORD. BRADFORD CABALLERO
CABALLERO, I DALI DALI I DRAWS
OH, I HUESO MEN. I PORTANTINO
PORTANTINO. AYE. IT HAS SEVEN.
GREAT THAT BILL HAS SEVEN VOTES,
AND WE'LL LEAVE IT OPEN FOR ANY
MEMBERS TO ADD ON. THANK YOU
VERY MUCH. REMEMBER HOLDEN. ALL
RIGHT. SO I. I THINK WE HAVE ALL
MEMBERS WHO THAT ARE PRESENT
THAT HAVE VOTED ON ALL THREE.
UM, AND SO WE WILL JUST WAIT
UNTIL WE HAVE ANY MEMBERS WHO
WISH TO ADD ON.
ALL RIGHT. SO WE WERE JUST TOLD
THAT WE ACTUALLY DON'T HAVE
ANYONE BE THAT'S GOING TO BE
ABLE TO MAKE IT FOR THIS
COMMITTEE. SO WE WILL GO AHEAD
AND CLOSE OUR SENATE COMMITTEE
ON BANKING AND FINANCE. THANK
YOU.