Earlier this week, the Digital Financial Assets Law, also known as AB 2269, was approved by the California State Assembly 71-0. From here, Gavin Newsom, the governor of the state, will either sign the bill into law or cut it out of possible legislation completely.
This new law will mandate that cryptocurrency firms and exchanges are required to obtain an operating license from the Department of Financial Protection and Innovation of the state of California. Any operations outside the scope of such license are forbidden and for each day that the rules are broken, offending platforms risk a civil fine of up to $100,000.
One of the Democratic sponsors of the bill, Timothy Grayson of Concord, previously said he understands and applauds the enthusiasm surrounding cryptocurrencies and digital assets and is excited to find a way to introduce the industry into the traditional financial system. He noted:
“I’m impressed by the market’s ability to help consumers feel empowered to make financial investments and participate in a system that has, in many cases, felt closed off to them… This bill will provide consumers basic but necessary protections and will promote a healthy cryptocurrency market by making it safer for everyone.”
Crypto regulation in California
As it stands, the Money Transmission Act is the legal framework in California. Without a current license from the Commissioner of Financial Protection and Innovation, this act forbids the operation of a money transfer firm. The new law (if it is put in place) would permit the authority to conduct investigations into firms regarding licenses among other things.
As it is currently, California regulators have been closely monitoring the cryptocurrency market. With the intention of aligning the state and federal regulatory frameworks for blockchain, Newsom signed an executive order in May. While they work on frameworks to regulate the space, state lawmakers have warned citizens to handle with interest-bearing crypto-asset accounts with caution.