California Governor Gavin Newsom has recently approved a new bill, the Digital Financial Assets Law, signaling a notable shift in his approach towards crypto regulation. The bill, set to take effect in July 2025, introduces stringent measures for individuals and businesses involved in crypto activities in the state.
Under the bill, all crypto entities must acquire a license from the Department of Financial Protection and Innovation (DFPI) to ensure compliance with the state’s regulatory framework. The primary objective is to safeguard consumers and create a more secure environment for crypto innovation.
Additionally, the legislation empowers the DFPI to impose thorough auditing requirements on crypto firms, necessitating the maintenance of comprehensive financial records for a period of five years.
The bill broadens the scope of the state’s money transmission laws, which presently require a valid license from the DFPI commissioner for banking and transfer services to operate.
Moreover, the bill defines cryptocurrencies as digital representations of value, serving as a medium of exchange, unit of account, or store of value, distinct from legal tender.
Enforcement measures will be taken against entities failing to comply with the new regulations, indicating a strict stance against non-adherence within the sector.
Notably, Governor Newsom’s approval of the bill marks a significant departure from his earlier position. Previously, he rejected a similar bill, citing the need to await federal regulations before implementing comprehensive crypto licensing measures in collaboration with the state legislature.
