California Governor Newsom greenlights pioneering crypto regulation bill, signaling a new era in cryptocurrency oversight starting 2025.
In a significant move aimed at regulating the rapidly evolving world of cryptocurrencies, California Governor Gavin Newsom has given his stamp of approval to a crypto bill that will usher in tighter controls for businesses engaged in crypto operations. Set to take effect in July 2025, the newly endorsed bill, titled the Digital Financial Assets Law, is set to introduce sweeping changes to how digital asset businesses operate in the state.
The key provision of the bill is the mandatory requirement for individuals and firms involved in crypto activities to obtain a Department of Financial Protection and Innovation (DFPI) license. This license, issued by the state regulatory body, will be a prerequisite for engaging in any digital asset-related business in California. This move aligns with the state’s existing money transmission laws, which mandate that banking and transfer services must operate under a DFPI commissioner-issued license.
However, the most striking aspect of this legislation is the newfound power granted to the DFPI. Under the Digital Financial Assets Law, the regulatory body will now have the authority to impose stringent audit requirements on crypto firms and compel them to maintain meticulous financial records. Specifically, the bill 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.”
Governor Newsom Highlights Crypto Regulation Importance
Governor Newsom underscored the importance of these measures in a statement published on October 13. He explained that this was a necessary step to bring more transparency and accountability to the cryptocurrency sector in California. Non-compliance with the bill will result in the enforcement of penalties, making it imperative for crypto businesses to adhere to the new regulations.
This decisive move by Governor Newsom marks a significant departure from his earlier stance. In 2022, he opted not to sign a similar bill that aimed to establish a licensing and regulatory framework for digital assets in California. At that time, he cited concerns about the inflexibility of the proposed regulations in a rapidly changing cryptographic landscape. Instead, Newsom had expressed his intention to wait for federal regulations to develop before working with the state legislature to craft comprehensive crypto licensing initiatives.
The world of cryptocurrencies has been gaining increasing attention from regulators at both the state and federal levels. Just recently, there has been discussion about applying the Electronic Fund Transfer Act to crypto to combat fraudulent transfers. Rohit Chopra, the director of the Consumer Financial Protection Bureau, has voiced his intent to authorize such measures as a means of “reducing the harm of errors, hacks, and unauthorized transfers.”
As California takes a definitive step towards crypto regulation, it remains to be seen how these new rules will impact the vibrant cryptocurrency industry in the state and whether other jurisdictions will follow suit in creating their regulatory frameworks. The crypto community and industry stakeholders will undoubtedly be closely watching the developments as the clock ticks toward July 2025.