California Governor Approves Stricter Crypto Regulations
California Governor Gavin Newsom has given his approval to a cryptocurrency bill that will introduce stricter regulations for businesses involved in crypto operations. The new regulations are set to take effect in 18 months.
Obtaining a License for Digital Asset Business Activities
In a statement released on October 13, Governor Newsom announced that the bill, titled AB-39, will require both individuals and firms to obtain a license from the Department of Financial Protection and Innovation (DFPI) in order to engage in digital asset business activities. The bill is scheduled to be implemented on July 1, 2025.
Comparison to Money Transmission Laws
The legislation draws a parallel with California’s existing money transmission laws, which prohibit banking and transfer services from operating without a DFPI Commissioner-issued license. The new crypto bill will allow the DFPI to impose strict audit requirements and record-keeping obligations on crypto firms.
“[This bill] would require a licensee to maintain […] for 5 years after the date of the activity, certain records, including a general ledger maintained at least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee.”
Firms failing to comply with the bill will face enforcement measures.
Past Rejection and Change of Stance
About a year ago, Newsom declined to sign a similar bill that aimed to establish a licensing and regulatory framework for digital assets in California. He cited its lack of flexibility in keeping up with rapidly evolving crypto trends as the reason for not endorsing it.
However, in a recent speech by Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), he expressed the intention to authorize this bill in order to “reduce harm of errors, hacks, and unauthorized transfers.”
Hot Take: Stricter Regulations for Crypto Businesses in California
California Governor Gavin Newsom has approved a cryptocurrency bill that will enforce stricter regulations on businesses conducting crypto operations. The bill requires individuals and firms to obtain a license from the Department of Financial Protection and Innovation (DFPI) to engage in digital asset business activities. The new regulations are set to take effect on July 1, 2025.
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