California's legislature has voted to reform a money-transmission law that has come under fire for stymying payments innovation.
On Friday, the state assembly unanimously approved a bill to reform the state's Money Transmission Act, according to a press release from Assemblymember Roger Dickinson, who wrote the law. The bill has been sent to Gov. Jerry Brown for his signature, the release says.
The bill would help ease the regulatory burdens of fledgling payments companies, Dickinson said. For example, it would clarify the net-worth requirement for new applicants for money-transmitter licenses. The current law gives regulators wide discretion to determine the net worth required of an applicant, up to $2 million depending on the scope of the business and other factors.
"Technological innovation within the money-transmission and payments industry has skyrocketed in the last few years, yet California's regulatory framework has lagged behind," said Dickinson in the press release. "Providing clarity to existing companies and new start-ups on licensing requirements will ensure a vibrant money transmission market place that is fair for business while protecting consumers."
The bill would also give California's Department of Business Oversight more authority over unlicensed companies, according to the release.
A 2011 law required California's payments startups to apply for domestic money-transmitter licenses and submit to oversight by the California Department of Financial Institutions, the predecessor to the Department of Business Oversight.
While many states have money-transmitter licenses, California's law has come under particular scrutiny, as critics have claimed that its stringent requirements have forced Silicon Valley-based payments startups to shut their doors or delay or shelve business plans.