California Governor Gavin Newsom has sanctioned a new cryptocurrency bill, introducing more stringent regulations for businesses engaged in crypto-oriented activities. The bill is set to take effect in 18 months on July 1st, 2025.
A New Era For Crypto Regulation
In a statement released on October 13th, Newsom announced the approval of the Digital Financial Assets Law, mandating individuals and companies to secure a Department of Financial Protection and Innovation (DFPI) license for participation in digital asset-related endeavors.
In the legislative documentation, it draws a parallel to the money transmission statutes of California, which disallow operations associated with banking and transfer services if they lack a license granted by the DFPI Commissioner.
Nevertheless, this fresh crypto legislation empowers the DFPI to impose rigorous auditing requisites on crypto enterprises and compel them to maintain specific record-keeping mandates. The bill further underscores that businesses not adhering to the legislation will face strict enforcement measures.
The Reason For This Bill
Approximately a year ago, Newsom made it a point not to endorse a similar bill designed to create a framework for licensing and regulating digital assets in California. Despite the bill effortlessly passing through the California State Assembly, Newsom indicated that he would not sign it. He suggested that the legislation lacked the flexibility needed to adapt to the rapidly evolving crypto landscape.
At the time, Newsom conveyed his intention to collaborate with the legislature on crypto licensing initiatives once federal regulations were in place. Meanwhile, various reports indicate that the United States is exploring the possibility of applying the Electronic Fund Transfer Act (EFTA) to cryptocurrencies as a measure to counteract fraudulent transfers and malicious activities.
In a recent address, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), voiced his intent to authorize this approach to mitigate the harm caused by errors, breaches, and unauthorized transfers within the crypto sector.