California Introduces New Bill to Tighten Crypto Regulation
A new bill, AB 39, has been introduced in California as part of efforts to strengthen crypto regulation in the state. This comes after a previous attempt with AB 2269 in February 2022, which proposed strict licensing requirements and operational responsibilities for companies engaged in digital financial activities with California residents. However, Governor Newsom vetoed that legislation, stating the need for a more transparent regulatory environment. The reintroduction of AB 39 suggests a different approach by California.
The Core Provisions of AB 39: Implications for Bitcoin Adoption
AB 39 states that starting July 1, 2025, no person can engage in digital financial asset business activity with California residents without meeting specific conditions. These conditions include obtaining a license, having a pending license application, or being exempt from licensing requirements. The bill defines “digital financial asset business activity” broadly and covers activities such as exchanging, transferring, or storing digital assets like Bitcoin.
AB 39 also brings stablecoins under the umbrella of digital assets and outlines regulatory responsibilities for businesses dealing with stablecoins. Companies must maintain detailed records for all digital financial asset activities for at least five years.
U.S. Crypto Regulation and Enforcement Measures in AB 39
The Department of Financial Protection and Innovation (DFPI) is granted the authority to examine and enforce the legislation. The DFPI can take action against both licensees and non-licensees who violate the provisions of AB 39 or other applicable California laws. Companies must disclose fees and charges before engaging in digital financial asset activities with California residents.
However, some concerns arise due to vague provisions in the bill. For example, it allows the DFPI to take enforcement action against someone who is “about to engage” in digital financial activities without specifying what constitutes being “about to engage.” This ambiguity could create challenges for new companies planning to operate in California.
Hot Take: Implications for Bitcoin Adoption and Crypto Regulation
California’s introduction of AB 39 signifies another attempt to establish a regulatory framework for the cryptocurrency industry. While it aims to protect consumers, the ambiguity in some provisions may pose challenges for businesses operating in the digital financial asset space. As this bill progresses, entities involved in the crypto sector should closely review its implications. California’s regulatory efforts could have significant consequences for Bitcoin adoption and crypto regulation across the United States.
By
By
By
By
