BILL ANALYSIS Ó
AB 129
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CONCURRENCE IN SENATE AMENDMENTS
AB 129 (Dickinson)
As Amended May 22, 2014
Majority vote
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|ASSEMBLY: |75-0 |(January 29, |SENATE: |28-3 |(June 19, |
| | |2014) | | |2014) |
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Original Committee Reference: B. & F.
SUMMARY : Repeals existing law which bans the issuance or
circulation of anything but lawful money of the United States.
The Senate amendments repeal Financial Code (FC) Section 107
which bans the use of anything but lawful currency.
EXISTING FEDERAL LAW provides that manufacturing counterfeit
United States currency or altering genuine currency to increase
its value is a violation of United States Code (U.S.C.) Title 18
Section 471 and is punishable by a fine of up to $5,000, or 15
years imprisonment, or both.
Possession of counterfeit United States obligations with
fraudulent intent is a violation of U.S.C. Title 18 Section 472
and is punishable by a fine of up to $15,000, or 15 years
imprisonment, or both.
Anyone who manufactures a counterfeit United States coin in any
denomination above $0.05 is subject to the same penalties as all
other counterfeiters. Anyone who alters a genuine coin to
increase its numismatic value is in violation of U.S.C. Title 18
Section 331, which is punishable by a fine of up to $2,000, or
imprisonment for up to five years, or both.
Forging, altering, or trafficking United States Government
checks, bonds, or other obligations is a violation of U.S.C.
Title 18 Section 510 and is punishable by a fine of up to
$10,000, or 10 years imprisonment, or both.
Printed reproductions, including photographs of paper currency,
checks, bonds, postage stamps, revenue stamps, and securities of
the United States and foreign governments (except under the
conditions previously listed) are violations of U.S.C. Title 18
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Section 474. Violations are punishable by fines of up to
$5,000, or 15 years imprisonment, or both.
U.S.C. Title 31 Section 5103 declares that United States coins
and currency (including Federal Reserve Notes and circulating
notes of Federal Reserve banks and national banks) are legal
tender for all debts, public charges, taxes, and dues.
EXISTING STATE LAW provides under Corporations Code Section 107
that no corporation, flexible purpose corporation, association,
or individual shall not issue or put in circulation, as money,
anything but the lawful money of the United States.
AS PASSED BY THE ASSEMBLY , this bill amended FC Section 107 to
specify that alternative currency such as digital currency are
legal to use. Subsequent research provided that FC Section 107
was not necessary, so the entire section is repealed via the
Senate amendments.
FISCAL EFFECT : None
COMMENTS : This bill makes clarifying changes to current law to
ensure that various forms of alternative currency such as
digital currency, points, coupons, or other objects of monetary
value do not violate the law when those methods are used for the
purchase of goods and services or the transmission of payments.
Modern methods of payment have expanded beyond the typical cash
or credit card transactions. Bitcoin, a digital currency (also
called cryptocurrency), has gained massive media attention
recently as the number of businesses has expanded to accept
Bitcoins for payment. Long before the introduction of digital
currencies, various businesses have created points models that
reward consumers with points for completion of various tasks
such as spending a certain dollar amount, or even by purchasing
points with dollars. These point systems effectively operate as
currency allowing the consumers to buy a retail item or pay for
some type of service. Many communities across the United States
and in California have created "community currencies" that are
created by members of a community in conjunction with merchants
who agree to accept the alternative currency. These "community
currencies" are created for a variety of reasons, some of which
include encouraging consumers to shop at small businesses within
the community or increasing neighborhood cohesiveness.
"Community currency" has also become a form of political protest
as some communities that use such currency do so in protest of
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United States monetary policies, or large financial
institutions. The following is a list of alternative
currencies:
1)BerkShares. While Bitcoin and Litecoins are worldwide
currencies, BerkShares are hyper-local: they are only
accepted in the Berkshires, a region in western Massachusetts.
According to the BerkShares Web site, more than 400 Berkshires
businesses accept the currency, and 13 banks serve as exchange
stations. "The currency distinguishes the local businesses
that accept the currency from those that do not, building
stronger relationships and greater affinity between the
business community and the citizens," the site reads.
2)Equal Dollars. Philadelphia is also trying out a local
currency with Equal Dollars. When you sign up to participate,
you receive 50 Equal Dollars; to earn more, you can offer your
own possessions in an online marketplace, volunteer or refer
friends.
3)Starbucks Stars. Use of Starbucks Stars is limited not to a
particular geographic locality, but to the corporate ecosystem
that is Starbucks. Once you get a Starbucks Card, you can
earn Starbucks Stars - which buy drinks and food - by paying
with the card, using the Starbucks app, or entering Starbucks
Star codes from various grocery store products. According to
Kemp-Robertson, 30% of transactions at Starbucks are made
using Starbucks Stars.
4)Amazon Coins. Another company-specific currency, Amazon
Coins, can be exchanged for "Kindle Fire apps, games, or
in-app items." You get 500 Amazon Coins, worth $5, by
purchasing a Kindle Fire, or can buy more Amazon Coins at a
slight savings.
5)Linden Dollars. Usable within the online community Second
Life, can be bought with traditional currency or earned by
selling goods or offering services to other Second Life
residents. Many people earn actual Linden salaries - some to
the tune of a million Linden Dollars.
6)Bitcoin. Bitcoin has garnered the most attention of any other
digital currency, but even for its increasing awareness in the
marketplace, many people do not completely understand what it
is or how it works. Bitcoin has been called the world's
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"first decentralized digital currency" and was created in 2009
by a programmer using the alias, Satoshi Nakomoto. The idea
behind Bitcoin is that it doesn't have a central clearinghouse
or any singular authority and it is not pegged to any real
tangible currency. Its value arises from the value that
people assign to it. It works via peer-to-peer network where
tasks are shared amongst multiple interconnected peers who
each make a portion of their resources (computing power)
directly available to other network participants, without the
need for centralized coordination by servers. The network
depends on users who provide their computing power to
reconcile transactions and keep the block chain. These users
in the system are called "minors" because they can potentially
be rewarded for their participation in the network with the
creation of Bitcoins. Bitcoins are created (mined) as
thousands of dispersed computers solve complex math problems.
With the solving of the complete math problem Bitcoins are
created. Bitcoin was designed to be a finite resource such as
gold or silver, thus the total number that can ever be created
is capped at 21 million Bitcoins. It has been estimated that
the last .00000001 of a Bitcoin will be "mined" in 2140.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081
FN: 0003933