The bill will force cryptocurrency companies to comply with licensing requirements, maintain financial records, and provide regulators with the authority to conduct audits.
California Governor Gavin Newsom has approved a cryptocurrency bill that imposes stricter rules on companies that deal in crypto, which will take effect in 18 months. Governor Newsom’s support for the cryptocurrency regulation bill represents a significant change from his previous stance.
California’s cryptocurrency industry is preparing for significant changes as Governor Gavin Newsom signs into law a groundbreaking regulatory bill that is expected to revamp the state’s digital asset landscape. The recently passed bill, the Digital Financial Assets Act, is scheduled to go into effect in July 2025, introducing a series of strict regulations for individuals and companies engaging in cryptocurrency-related activities within the state.
Under the provisions of the bill, all crypto entities will be mandated to obtain a license from the Department of Financial Protection and Innovation (DFPI) to ensure compliance with the state’s comprehensive regulatory framework. The measure aims to strengthen consumer protection and foster a safer and more responsible environment for crypto innovation.
California Will Impose Robust Audits on Cryptocurrency Companies
In an official statement on October 13, Governor Newsom said that the new cryptocurrency bill gives the DFPI the authority to monitor cryptocurrency-related activities in the region with an implementation date of 18 months to ensure that the framework adopted regulatory framework can be carefully adapted to address industry trends. and mitigate harm to the consumer.
According to legislative documents, the new law also empowers the DFPI to impose strong audit obligations on crypto companies and require them to maintain complete financial records. It reads:
“[This bill] would require a licensee to maintain […] for five 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. licensee.”
The development comes as an expansion of the state’s money transmission laws, which currently restrict banking and transfer services from operating without a valid license issued by the DFPI commissioner.
DFPI Will Take Coercive Measures Against Defaulters
The legislative document also revealed that the State of California would recognize cryptocurrencies as a “digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in foreign currency”. legal tender, except as specified” under the new rules that will take effect in 2025.
While the bill was set for commerce on July 1, 2025 and thereafter, it will only go into effect when State Senate Bill SB 401 of the 2023-24 regular session is enacted and takes effect on July 1. January 2024 or earlier.
“This bill would authorize the department to take enforcement action against a licensee or a person who is not a licensee but who has engaged, is engaging, or is about to engage in digital financial asset trading activity with or on behalf of a resident in any of certain cases, including the licensee or person, materially violates the provisions of the bill, a rule adopted, or an order issued pursuant to the bill,” reads the document.
Governor Newsom’s support for the cryptocurrency regulation bill represents a significant change from his previous stance. Last year, Newsom rejected a similar bill designed to establish a comprehensive regulatory framework for digital assets in California.
By Audy Castaneda
