FaceCash Founder Claims New Regulation is Unconstitutional | Xconomy

▤ Summary

For months, Aaron Greenspan, the founder of the now-defunct mobile payments service FaceCash, has been getting deeper into a legal battle with the State of California over the way it regulates money transfers. According to an open letter Greenspan wrote to Governor Jerry Brown, a new financial regulation enacted in the state last year “makes it nearly impossible for new companies to offer disruptive products and services. By virtue of the fact that Silicon Valley is in California, this means that innovation in the payments sector in this country has more or less stopped.” In November, Greenspan filed a civil complaint against the State of California, claiming that the new law, called the Money Transmission Act, is unconstitutional because it attempts to regulate interstate commerce, and because the burden of the law outweigh the benefits. But as Greenspan was getting pilot vendors and users on board in Silicon Valley, the state enacted the MTA, which requires that companies that work as domestic money transmitters within California obtain a license to operate. Under the new legislation, these companies are required to have a minimum net worth of $500,000, as well as bonds or securities on deposit of at least $500,000 or 50 percent of daily outstanding payments, whichever amount is greater.

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