Sustainable Economies Law Center has been fighting hard and may now be able to take credit for small reforms to one of California’s most draconian and economically repressive laws, the Money Transmission Act (MTA). The MTA presents a nearly insurmountable barrier for small enterprises and cooperatives that facilitate the sale of products and services by receiving payment from one person and transferring it to another.

Most people’s jaws drop when they learn that they may be committing a felony if they do not meet the requirement of a $5,000 initial license application fee, $2,500 annual renewal fee, a $250,000 or $500,000 bond or securities on deposit, and a minimum net worth of $250,000. The CA Department of Business Oversight’s latest draft of proposed regulations incorporates SELC’s suggestions that 501(c)(3) nonprofits be exempt from registration and that the Department create a process for other enterprises to apply for an exemption. It’s a small victory, and we will continue to urge the state to consider SELC’s proposals for a more sensible law.

Learn more about Money Transmission Laws and the potential implications for community currencies, cooperatives, and other small enterprises at CommunityCurrenciesLaw.org

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.

On June 28th, California took a significant step toward further legitimizing the creation and circulation of community currencies and other innovative means of exchange. Signed into law by Gov. Brown, the California Alternative Currencies Act (AB 129) repeals the outdated and vague Section 107 of the California Corporations Code, thus removing a significant legal barrier to the continued growth of the community currencies movement.

Read the chaptered bill here.

The Sustainable Economies Law Center has officially submitted a letter of support for AB-129, the California Alternative Currencies Act. This bill makes an important amendment to the California Corporations Code, clarifying that the use and circulation of alternative currencies is not prohibited. While SELC has advocated for removing Section 107 of the CA Corporations Code, this bill still takes a step toward a more resilient monetary system by legitimizing the use of alternative currencies in California.

The term "alternative currencies" can denote a wide range of currency designs and projects, and is not clearly defined in this bill. SELC specifically advocates for "community currencies" - forms of exchange designed to meet the particular needs of specific communities or regions, and that are democratically controlled and managed by the communities using them.

Read more about SELC's Community Currencies advocacy here. Continue reading below for how you can support this bill, too.

The Arroyo Seco Network of Time Banks (ASNTB)  has just launched the first ever small business community revolving loan fund operated by a Time Bank. Two loans have already been granted to community members who qualify as "economically distressed, women, the environment, community sustainability, social enterprises, member of the ASNTB, cooperatives, or other sharing economy initiatives."

The Sustainable Economies Law Center is proud to have provided legal assistance in support of this model organization.

We believe that a resilient and just economy includes many diverse forms of exchange, allowing all members of a community to meaningfully participate in the economy and have their gifts valued appropriately. Community currencies are one way of strengthening both local economies and our national economy as a whole, by giving more people access to a means of exchange and thus increasing economic activity in ways that support, rather than destroy, local communities and the natural world.