California Gov. Newsom Greenlights Crypto Regulation Bill for 2025 – Governor Gavin Newsom of California has given his approval to a cryptocurrency bill that will impose more stringent regulations on businesses engaged in cryptocurrency operations. These regulations are scheduled to take effect in 18 months and will require cryptocurrency companies to comply with licensing prerequisites, uphold financial records, and grant regulators the power to perform audits.
In a statement released on October 13, Governor Newsom announced that the ‘Digital Financial Assets Law’ will necessitate both individuals and businesses to secure a Department of Financial Protection and Innovation (DFPI) license to participate in digital asset-related activities. The bill is set to be enforced starting on July 1, 2025.
Within legislative documents, it is likened to California’s money transmission laws, which forbid banking and transfer services from functioning without a license granted by the DFPI Commissioner. Nevertheless, the forthcoming cryptocurrency bill grants the DFPI the authority to impose rigorous audit demands on cryptocurrency companies and obliges them to maintain specific record-keeping standards.
The statement noted: “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.” Additionally, it specifies that businesses failing to comply with the bill will be subject to enforcement measures. Approximately one year ago, Governor Newsom opted not to sign a similar bill aimed at creating a regulatory framework and licensing system for digital assets in California.
Despite the bill receiving unanimous approval in the California State Assembly, Newsom stated that he was returning the bill “without my signature.” He cited concerns about the bill’s ability to adapt to the rapidly evolving trends in the cryptocurrency industry. At that time, Newsom indicated that he was awaiting federal regulations before collaborating with the legislature to establish cryptocurrency licensing initiatives.
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In a recent development, it was reported that the United States is exploring the potential application of the Electronic Fund Transfer Act (ETFA) to cryptocurrencies as a means to combat fraudulent transfers. In a recent address, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), expressed his intent to grant approval for this measure to mitigate the harm caused by errors, hacks, and unauthorized transfers.