New Crypto Bill in California Set for 2025
California Governor Gavin Newsom approves a stringent crypto regulation bill set to take effect in July 2025.
California Governor Gavin Newsom recently gave the nod to a groundbreaking bill focused on tightening crypto regulations. The new law, known as the Digital Financial Assets Law, will go into effect in July 2025 and will have a significant impact on both individuals and companies in the crypto space. This move has triggered a buzz in the industry, especially since Newsom previously rejected a similar proposal just last year.
Stricter Regulations in the Offing
For those planning to engage in digital asset transactions, this law mandates the acquisition of a license from the Department of Financial Protection and Innovation (DFPI). This requirement aligns closely with existing laws in California that forbid unlicensed banking and money transfer activities. The DFPI, which usually grants licenses for these traditional services, will now oversee the cryptocurrency sector as well.
This bill doesn’t stop at licensing. It also equips the DFPI with the authority to carry out rigorous audits of crypto firms. Companies must maintain detailed financial records, including monthly general ledgers that capture their assets, liabilities, income, and expenses. This data must be stored for at least five years following the related activities.
Failure to meet these conditions will not go unpunished. The new law allows for stern enforcement actions against those who don’t comply. So if you’re in the crypto business, consider this your heads-up to get your house in order before July 2025.
A Change in Stance from Last Year
Interestingly, this isn’t the first time that the Golden State attempted to bring crypto firms under the regulatory umbrella. Last year, a similar bill made it through the California State Assembly but failed to get Newsom’s approval. At that time, the Governor expressed reservations about the legislation’s adaptability to the fast-evolving landscape of digital currencies.
Newsom’s decision last year also hinged on the anticipation of federal regulations. He opted to bide his time until the U.S. government made its move in the crypto arena. Recent reports indicate that American authorities are contemplating the inclusion of cryptocurrencies under the Electronic Fund Transfer Act to mitigate fraudulent transfers.