California Governor Signs Digital Financial Assets Law, Regulating Cryptocurrency Industry

The signing of the Digital Financial Assets Law by California Governor Gavin Newsom has caused a stir in the industry, with many viewing it as a response to recent scandals. The new law is based on New York's bitlicense regime and puts the responsibility of filling in the details on California's Department of Financial Protection and Innovation (DFPI). The DFPI should prioritize protecting consumers, investors, and the company itself from cyber threats and criminal misuse, as well as enforcing policies tailored to the business and consistently deploying and enforcing them. The agency should also draft regulations well in advance, define terms and the scope of regulation, and consider having companies register with the agency before applying for licensing. The California bill will come into effect on July 1, 2025, and the industry should start preparing for compliance measures without waiting for regulations to be issued.