California's New Crypto Regulation: The Digital Financial Assets Law
California Governor Gavin Newsom has greenlit a new cryptocurrency bill set to take effect in July 2025. Named the "Digital Financial Assets Law", this legislation mandates both individuals and businesses to acquire a license from the Department of Financial Protection and Innovation (DFPI) before engaging in digital currency activities.
Echoing California's money transmission laws, firms cannot operate banking and transfer services without a DFPI-endorsed license. This new legislation, however, goes a step further. The DFPI now has the power to implement rigorous audit standards on cryptocurrency entities, mandating them to keep meticulous records. As per the law, companies must maintain detailed records, like a monthly-updated general ledger encompassing all their financial details, for a period of five years post-activity. Non-compliance will trigger enforcement actions.
Interestingly, in 2022, Governor Newsom opted not to approve a related bill that aimed to set a licensing framework for digital assets, despite unanimous support in the California State Assembly. He cited the bill's inability to evolve with rapid cryptocurrency developments and expressed his intention to wait for federal guidelines before finalizing state-based crypto licensing measures.
In related U.S. crypto news, recent discussions have arisen about integrating the Electronic Fund Transfer Act with cryptocurrencies, targeting the prevention of fraudulent transfers. Rohit Chopra, the director of the Consumer Financial Protection Bureau, recently shared his ambition to implement this integration to minimize risks associated with errors, hacks, and unauthorized transfers.
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