Digital Financial Assets

On October 13, 2023, Governor Newsom signed into law Assembly Bill 39 and Senate Bill 401, together called the Digital Financial Assets Law (DFAL). Later, on September 29, 2024, Governor Newsom signed AB 1934 which extended the date of licensure under DFAL from July 1, 2025 to July 1, 2026.

The DFAL provides the DFPI with rulemaking authority and an operative date of July 1, 2026 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 DFAL provides the DFPI with rulemaking authority to ensure the adopted regulatory framework can be thoughtfully tailored to address industry trends and mitigate consumer harm.

Second Invitation for Comments – Respond by November 18, 2024

On October 2, 2024 the DFPI invited public comments related to the DFAL license application, application fees, and other topics. The Commissioner invites interested parties to submit comments by November 18, 2024. Information available here.

First Invitation for Comments

The DFPI issued its first invitation for public comment on the Digital Financial Assets Law (DFAL) in late 2023 and received comments in January 2024 related to the DFAL license application, licensure requirements, and stablecoin approval. Read the comments from 18 interested organizations.

Licensing

Beginning July 1, 2026, 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 [email protected].

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.  These dates remain operative for kiosk operators and were unchanged by AB 1934.

However, with the passage of AB 1934, operators must comply with the licensing requirements stated in the law by July 1, 2026. Learn more on the kiosk operators webpage.