California Governor Gavin Newsom has given his approval to a cryptocurrency bill that will impose stricter regulations on businesses involved in cryptocurrency operations. This new set of rules is scheduled to come into effect in July 2025.
In an official statement released on October 13th, Governor Newsom announced the introduction of the Digital Financial Assets Law, a bill that mandates both individuals and companies to obtain a license from the Department of Financial Protection and Innovation (DFPI) in order to engage in digital asset-related activities.
The bill references California’s money transmission laws, which explicitly prohibit banking and transfer services from operating without a license issued by the DFPI commissioner.
What sets this crypto bill apart is its provision for the DFPI to enforce rigorous auditing procedures on cryptocurrency firms and compel them to maintain thorough records. The statement elaborates:
“[This bill] would require a licensee to maintain records… for a period of 5 years from the date of the activity, including a general ledger that is updated at least monthly, detailing all assets, liabilities, capital, income, and expenses of the licensee.”
Moreover, the bill stipulates that firms failing to comply with these regulations will face stringent enforcement measures.
It’s worth noting that in 2022, Governor Newsom chose not to sign a similar bill designed to establish a licensing and regulatory framework for digital assets in California. Despite the bill’s smooth passage through the California State Assembly, Governor Newsom explained that he was returning it “without my signature.”
Governor Newsom’s rationale was the bill’s perceived inflexibility in keeping pace with the rapidly evolving trends in the cryptocurrency world. At that time, he expressed a desire to await federal regulations before collaborating with the legislature to create crypto licensing initiatives.
