California Gov. Newsom Approves New Crypto Regulation Bill for 2025
California Governor Gavin Newsom has given the green light to a cryptocurrency bill that imposes stricter regulations on businesses involved in crypto operations. The new regulations are set to take effect in 18 months.
In a statement released on October 13, Governor Newsom announced the approval of the bill named the ‘Digital Financial Assets Law.’ This bill will make it mandatory for individuals and firms to obtain a license from the Department of Financial Protection and Innovation (DFPI) in order to engage in digital asset activities.
The new regulations are slated to go into effect on July 1, 2025.
According to the legislation documents, the bill draws parallels to California’s existing money transmission laws, which already require banking and transfer services to operate with a license granted by the DFPI Commissioner.
However, unlike the existing laws, the new crypto bill will allow the DFPI to impose stricter audit requirements on crypto firms and enforce recording requirements. The statement specifically states:
“[This bill] would require a licensee to maintain […] for 5 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.”
The statement further emphasizes that firms failing to comply with the bill will face enforcement measures.
About a year ago, Governor Newsom declined to sign a similar bill that aimed to establish a licensing and regulatory framework for digital assets in California.
Although the bill passed through the California State Assembly without opposition, Governor Newsom explained that he sent the bill back “without my signature.”
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At the time, Newsom expressed that the bill lacked flexibility and was not adaptable to the rapidly changing crypto landscape.
He mentioned that he was waiting for federal regulations to be put in place before collaborating with the legislature to create crypto licensing initiatives.
Meanwhile, Cointelegraph recently reported that the United States is considering the application of the Electronic Fund Transfer Act (ETFA) to cryptocurrency as a means to combat fraudulent transfers.
In a recent speech, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), stated his intention to authorize this measure in order to “reduce the harm from errors, hacks, and unauthorized transfers.”
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Licensing Requirements for Crypto Businesses
The new cryptocurrency bill signed by Governor Newsom introduces stricter regulations for businesses involved in digital asset activities. Under the Digital Financial Assets Law, both individuals and firms are required to obtain a license from the Department of Financial Protection and Innovation (DFPI) in order to engage in crypto operations.
The bill, which is set to take effect in July 2025, mandates that license holders maintain certain records for a period of five years. These records include a general ledger that lists all assets, liabilities, capital, income, and expenses of the licensee.
Failure to comply with the licensing and record-keeping requirements outlined in the bill will result in enforcement measures against non-compliant firms.
Prior Rejection of Similar Legislation
This is not the first time that Governor Newsom has encountered a bill aimed at regulating digital assets in California. Around a year ago, he declined to sign a similar bill, expressing concerns about its flexibility in keeping up with the rapidly changing crypto landscape.
Newsom stated that he wanted to wait for federal regulations to be implemented before collaborating with the legislature to establish licensing initiatives for cryptocurrencies.
US Exploring Application of ETFA to Cryptocurrency
As the US continues to navigate the regulatory landscape of cryptocurrencies, there have been discussions about applying the Electronic Fund Transfer Act (ETFA) to digital assets. This move is seen as a measure to combat fraudulent transfers, errors, and hacks.
Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), has expressed his intention to authorize the application of the ETFA to reduce the risks associated with unauthorized transfers.
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