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That's not what it says, and that's not any of the sections where it says it. §2037(e) says you need a surety bond.

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&gr...

Surety bonds are not 1:1 reserves.

CA Fin. Code sec. 2037(e): "A licensee that engages in receiving money for transmission shall maintain securities on deposit or a bond of a surety company in an amount greater than the average daily outstanding obligations for money received for transmission in California, provided that such amount shall not be less than two hundred fifty thousand dollars ($250,000) nor more than seven million dollars ($7,000,000)."

A surety bond is an insurance policy good for the full amount of the bond. A bonding company[2] will have a lot of questions to ask a Bitcoin business before taking on that risk.

[1] http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&gr... [2] https://suretygroup.com/surety-bond/money-transmitter-bond

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