California Governor Gavin Newsom has approved a cryptocurrency bill that enforces stricter regulations on businesses conducting crypto operations, set to begin in 18 months. The bill, titled the ‘Digital Financial Assets Law,’ will make it mandatory for both individuals and firms to obtain a Department of Financial Protection and Innovation (DFPI) license to engage in digital asset business activities. The bill is scheduled to come into effect on July 1, 2025.
Key Points:
- California Governor Gavin Newsom approves crypto regulation bill.
- Stricter regulations will apply to businesses engaged in crypto operations.
- Individuals and firms will need a DFPI license for digital asset business activities.
- The bill will enforce stringent audit requirements and recording obligations on crypto firms.
- Firms not complying with the bill will face enforcement measures.
- Previously, Newsom declined to sign a similar bill last year.
In a statement published on October 13, Newsom declared that the bill will enforce stricter regulations on businesses conducting crypto operations. It will require individuals and firms engaged in digital asset business activities to obtain a DFPI license. The bill is scheduled to come into effect on July 1, 2025.
The bill draws a comparison to California’s money transmission laws, which prohibit banking and transfer services from operating without a license granted by the DFPI Commissioner. However, the new crypto bill will allow the DFPI to impose stringent audit requirements on crypto firms as well as force them to uphold recording requirements. Firms not complying with the bill will face enforcement measures.
Last year, Newsom declined to sign a similar bill that aimed to establish a licensing and regulatory framework for digital assets in California. Newsom suggested that the bill wasn’t flexible enough to keep up with fast-changing crypto trends. He stated that he was waiting for federal regulations to come into place before working with the legislature to establish crypto licensing initiatives.
California’s move to regulate the crypto industry comes as the U.S. explores the possibility of applying the Electronic Fund Transfer Act (ETFA) to crypto as a measure to combat fraudulent transfers. Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), expressed his intention to grant authorization for this in a recent speech.
Overall, the regulation bill signed by Governor Newsom sets the stage for stricter regulations on crypto operations in California starting from 2025.
