New Crypto Regulation Bill Approved in California
The state of California has recently passed a new cryptocurrency regulation bill called the Digital Financial Assets Law. This bill, set to take effect in July 2025, aims to establish a stricter regulatory framework for individuals and businesses involved in digital asset activities. It is similar to New York’s “BitLicense” and has received both support and criticism from the cryptocurrency industry.
Key Points of the Digital Financial Assets Law
The legislation mandates that entities engaged in digital asset activities must obtain a license from the Department of Financial Protection and Innovation (DFPI) to continue operating in California. The DFPI will have authority over the crypto industry and will be responsible for creating a regulatory framework, including licensing requirements.
The new law builds upon existing money transmission laws in California, which already require banking and transfer services to have a valid license from the DFPI commissioner. The DFPI will have 18 months to develop the regulatory framework, taking into account industry trends and consumer protection.
Strict Requirements for Licensees
Licensees under the Digital Financial Assets Law will be subject to stringent requirements. They must maintain detailed records for at least five years, including a monthly updated general ledger that covers all assets, liabilities, capital, income, and expenses. Failure to comply with these requirements will result in enforcement actions against non-compliant firms.
A Change in Governor Newsom’s Stance
Governor Gavin Newsom’s approval of the crypto regulation bill marks a shift from his previous position on the industry. He had previously rejected a similar bill, citing concerns about its flexibility and the need for federal regulations. However, Newsom now believes it is important to strike a balance between consumer protection and fostering responsible innovation.
Hot Take: California Strengthens Crypto Regulation
With the approval of the Digital Financial Assets Law, California is taking a significant step towards implementing a stricter regulatory framework for the crypto industry. The new law aims to protect consumers and promote responsible innovation by requiring entities involved in digital asset activities to obtain a license from the DFPI. Licensees will face strict requirements, including maintaining detailed records. Governor Newsom’s change in stance reflects the growing recognition of the need for state-level regulation in the rapidly evolving crypto landscape.
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