Digital Financial Assets Law
On October 13, 2023, Governor Newsom signed into law Assembly Bill 39 and Senate Bill 401, together called the Digital Financial Assets Law (DFAL).
The DFAL provides the DFPI with rulemaking authority and an operative date of July 1, 2025 to ensure the regulatory framework is thoughtfully tailored to provide investor and consumer protections and address the crypto asset industry.
Frequently Asked Questions
Public Comments on Rulemaking
The DFPI sought and received public comment for the new Digital Financial Assets Law (DFAL) prior to engaging in formal rulemaking. The DFAL provides the DFPI with rulemaking authority and an 18-month delayed operative date to ensure the adopted regulatory framework can be thoughtfully tailored to address industry trends and mitigate consumer harm.
Comments were invited by Jan. 12, 2024, related to the DFAL license application, licensure requirements, and stablecoin approval. Read the comments from 18 interested organizations.
Licensing
Beginning July 1, 2025, companies must be licensed by the DFPI or have applied for a license with the DFPI to operate in California. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from the DFPI. Digital financial business activity includes activities such as exchanging, storing, or transferring a digital financial asset, such as a crypto asset. The new law promotes consumer and investor protection by creating a robust regulatory framework, including supervision and enforcement authority, for certain crypto activities.
Prospective Licensees
If you are a prospective DFAL licensee, or have a question about how the law affects your business, join our email list to receive future updates or email crypto@dfpi.ca.gov.
Kiosks
The Digital Financial Assets Law requires a digital financial asset transaction kiosk operator (“kiosk operator”) to comply with certain requirements in California.
Beginning January 1, 2024, a kiosk operator must provide the Department a list of all kiosk locations that an operator owns, operates, or manages in the state. An operator is defined as a person who owns, operates, or manages a digital financial asset transaction kiosk located in this state. Additionally, by January 1, 2024, an operator (1) may not dispense or accept more than $1,000 in a day to or from a customer via kiosks and (2) must provide a customer with a receipt with specified information for any transaction made at the operator’s kiosk.
Beginning January 1, 2025, kiosk operators must provide pre-transaction disclosures to customers and are prohibited from collecting from customers in any single transaction the greater of $5 or 15% of the U.S. dollar equivalent of digital financial assets involved in the transaction.
By July 1, 2025, operators must comply with the licensing requirements stated in the law. Learn more on the kiosk operators webpage.