Cal. FIN § 3102 — California Code / Code fin / Division 1.25 / Chapter 1 / Section 3102
Section 3102
Status: in_force

For purposes of this division:

(a) “Applicant” means a person that applies for a license under this division.

(b) “Bank” means a bank, savings bank, savings and loan association, savings association, or industrial loan company chartered under the laws of this state or any other state or under the laws of the United States.

(c) “Control” means both of the following:

(1) When used in reference to a transaction or relationship involving a digital financial asset, power to execute unilaterally or prevent indefinitely a digital financial asset transaction, unless the power to prevent indefinitely is limited to the ability to terminate, suspend, or interrupt a transaction solely in response to unauthorized or fraudulent activity.

(2) When used in reference to a person, the direct or indirect power to do either of the following:

(A) Vote 25 percent or more of any class of the voting securities issued by a person.

(B) Direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, other than a commercial contract for goods or nonmanagement services, or otherwise, if no individual is deemed to control a person solely on account of being a director, officer, or employee of such person.

(d) “Covered person” means a person required to obtain a license pursuant to this division.

(e) “Credit union” means a credit union licensed under the laws of this state, or any other state, or a federal credit union chartered under the laws of the United States.

(f) “Department” means the Department of Financial Protection and Innovation.

(g) (1) “Digital financial asset” means a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender.

(2) “Digital financial asset” does not include any of the following:

(A) A transaction in which a merchant grants, as part of an affinity or rewards program, digital representations of value that primarily relate to the affinity or rewards program and cannot be taken from or exchanged with the merchant for legal tender, bank or credit union credit, or a digital financial asset.

(B) A digital representation of value issued by or on behalf of a publisher and used primarily within online games or game platforms and that is not otherwise a digital financial asset.

(C) A security registered with or exempt from registration with the United States Securities and Exchange Commission or a security qualified with or exempt from qualifications with the department.

(D) A digital record of ownership, or equivalent thereto, of tangible or intangible goods, including, but not limited to, any of the following:

(i) Works of art, musical compositions, literary works, and similar intellectual property.

(ii) Collectibles, merchandise, virtual land, and in-game assets.

(iii) Digital affinity, loyalty, or rewards points granted by a merchant or a network of participating merchants if all of the following are true:

(I) The points cannot be redeemed with a participating merchant in exchange for legal tender, bank or credit union credit, or a digital financial asset.

(II) The points can only be redeemed by participating merchants as part of the purchase of goods or services, which does not include digital financial assets.

(III) The points are granted or redeemed by participating merchants pursuant to a formal loyalty program intended to reward frequent customers.

(iv) Licenses, tickets, and similar rights to attend events or participate in activities.

(h) “Digital financial asset business activity” means either of the following:

(1) Exchanging, transferring, or storing a digital financial asset.

(2) Holding electronic precious metals or electronic certificates representing interests in precious metals on behalf of another person or issuing shares or electronic certificates representing interests in precious metals.

(i) “Exchange,” when used as a verb, means to assume control of a digital financial asset from, or on behalf of, a resident, at least momentarily, to sell, trade, or convert either of the following:

(1) A digital financial asset for legal tender, bank or credit union credit, or one or more forms of digital financial assets.

(2) Legal tender or bank or credit union credit for one or more forms of digital financial assets.

(j)  “Executive officer” includes, but is not limited to, an individual who is a director, officer, manager, managing member, partner, or trustee of a person that is not an individual, or any other person who performs similar policymaking or policy implementation functions.

(k) “Insolvent” means any of the following:

(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute.

(2) Being unable to pay debts as they become due.

(3) Being insolvent within the meaning of federal bankruptcy law.

(l) “Legal tender” means a medium of exchange or unit of value, including the coin or paper money of the United States, issued by the United States or by another government.

(m) “Licensee” means a person licensed or conditionally licensed under this division.

(n) (1) “Person” means an individual, partnership, estate, business or nonprofit entity, or other legal entity.

(2) “Person” does not include a government-sponsored enterprise, government, or governmental subdivision, agency, or instrumentality.

(o) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(p) (1) “Resident” means any of the following:

(A) A person who is domiciled in this state.

(B) A person who is physically located in this state for more than 183 days of the previous 365 days.

(C) A person who has a place of business in this state.

(D) A legal representative of a person that is domiciled in this state.

(2) Notwithstanding paragraph (1), “resident” does not include a licensee or an affiliate, as defined in subdivision (a) of Section 90005, of a licensee.

(q) “Responsible individual” means an individual who has direct control over, or significant management policy and decisionmaking authority with respect to, a licensee’s digital financial asset business activity in this state.

(r) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(s) “Sign” means, with present intent to authenticate or adopt a record, either of the following:

(1) To execute or adopt a tangible symbol.

(2) To attach to, or logically associate with, the record an electronic symbol, sound, or process.

(t) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(u) “Store,” except in the phrase “store of value,” means to maintain control of a digital financial asset on behalf of a resident by a person other than the resident. “Storage” and “storing” have corresponding meanings.

(v) “Transfer” means to assume control of a digital financial asset from, or on behalf of, a resident and to subsequently do any of the following:

(1) Credit the digital financial asset to the account of another person.

(2) Move the digital financial asset from one account of a resident to another account of the same resident.

(3) Relinquish control of a digital financial asset to another person.

(w) “United States dollar equivalent of digital financial assets” means the equivalent value of a particular digital financial asset in United States dollars shown on a digital financial asset exchange based in the United States for a particular date or period specified in this division.