Financial Code - FIN - FIN § 3207

Summary

(a) (1) (A) A licensee shall maintain a surety bond or trust account in United States dollars in a form and amount as determined by the department for the protection of residents that engage in digital financial asset business activity with the licensee. (B) If a licensee maintai

Text

(a)
(1)
(A)
A licensee shall maintain a surety bond or trust account in United States dollars in a form and amount as determined by the department for the protection of residents that engage in digital financial asset business activity with the licensee.
(B)
If a licensee maintains a trust account pursuant to this section, that trust account shall be maintained with a bank, trust company, credit union, or federal credit union in the state, subject to the prior approval of the department.
(2)
Security deposited under this section shall be payable to this state for the
benefit of a claim against the licensee on account of the licensee’s digital financial asset business activity with, or on behalf of, a resident.
(3)
Security deposited under this section shall cover claims for a period determined by the department for the protection of residents with whom a licensee engages in digital financial business activity, including for an additional period the department specifies after the licensee ceases to engage in digital financial asset business activity with or on behalf of a resident.
(4)
The department may require the licensee to increase the amount of security deposited under this section, and the licensee shall deposit the additional security not later than 30 days after the licensee receives notice in a record of the required increase.
(5)
The department may permit a licensee to substitute or deposit an alternate form of security satisfactory to the department if the licensee at all times complies with this section.
(6)
A claimant does not have a direct right to recover against security deposited under this section.
(7)
Only the department may recover against the security, and the department may retain the recovery for no longer than five years and may process claims and distribute recoveries to claimants in accordance with rules adopted by the commissioner.
(b)
In addition to the security required under subdivision (a), a licensee shall maintain at all times capital and liquidity in an amount and
form as the department determines is sufficient to ensure the financial integrity of the licensee and its ongoing operations based on an assessment of the specific risks applicable to the licensee. In determining the minimum amount of capital and liquidity that shall be maintained by a licensee, the department may consider factors, including, but not limited to, all of the following:
(1)
The composition of the licensee’s total assets, including the position, size, quality, liquidity, risk exposure, and price volatility of each type of asset.
(2)
The composition of the licensee’s total liabilities, including the size and repayment timing of each type of liability.
(3)
The actual and expected volume of the licensee’s digital
financial asset business activity.
(4)
The amount of leverage employed by the licensee.
(5)
The liquidity position of the licensee.
(6)
The financial protection that the licensee provides pursuant to subdivision (a).
(7)
The types of entities to be serviced by the licensee.
(8)
The types of products or services to be offered by the licensee.
(9)
Arrangements adopted by the licensee for the protection of its customers in the event of the licensee’s insolvency.
(c)
A licensee shall hold liquid assets required to be maintained in accordance with this section in the form of cash, digital financial assets other than digital financial assets over which it has control for a resident entitled to the protections of Section 3503, or high-quality, liquid assets as defined in subdivision (a) of Section 249.20 of Title 12 of the Code of Federal Regulations in proportions determined by the department.
(d)
The department may require a licensee to increase the capital or liquidity required under this section. A licensee shall submit evidence satisfactory to the department that the licensee has additional capital or liquidity required pursuant to this subdivision not later than 30 days after the licensee receives notice in a record of the required increase.

Retrieval chunks

• #1 | Financial Code - FIN - FIN § 3207

  (a) (1) (A) A licensee shall maintain a surety bond or trust account in United States dollars in a form and amount as determined by the department for the protection of residents that engage in digital financial asset business activity with the licensee. (B) If a licensee maintains a trust account pursuant to thi…

• #2

  The composition of the licensee’s total assets, including the position, size, quality, liquidity, risk exposure, and price volatility of each type of asset. (2) The composition of the licensee’s total liabilities, including the size and repayment timing of each type of liability. (3) The actual and expected volume…