In 2010, the California legislature passed the Money Transmission Act (2010), a sweeping law intended to regulate the payments industry and other activities broadly defined as "money transmission." Though the law was written to “protect the interests of consumers of money transmission businesses . . . [and to] maintain public confidence in financial institutions,” the proposed regulations erect significant financial and compliance barriers for small-scale and cooperative enterprises whose services may include "money transmission."
In particular, community currencies, lending circles, online peer-to-peer distribution platforms, and other small-scale enterprises that involve sending money or stored value may be implicated by pending MTA regulations.
Recently, the California Department of Business Oversight (DBO), the agency responsible for implementation of the MTA, issued a Notice of Rulemaking Action announcing proposed amendments to the draft MTA regulations, and inviting written comments relevant to the proposed regulatory action. Although the new proposed regulations incorporate several recommendations previously submitted by SELC to the DBO, we are still concerned about the potential adverse impacts of these proposed regulations on small business and the California economy as a whole.
To address concerns about the impact of MTA regulations on small businesses, community currencies, and other community-based enterprises, SELC recommends that the DBO:
- Revise or issue a new Notice of Rulemaking Action to include analyses of the impacts on small businesses and the economy,
- Clarify the definition of “money transmitter” to make clear what activities are not included,
- Create exemptions from all or parts of the law for certain small businesses and organizations,
- Specify a time period in which the Commissioner must respond to a letter requesting an order of exemption, and
- Reduce application requirements for certain small-volume and medium-volume money transmitters.
To read more about money transmission laws, other financial and banking laws affecting community currencies, and learn how you can get involved, visit CommunityCurrenciesLaw.org.
(image credit: epSos.de.)