California Introduces Stricter Crypto Regulations for 2025

California is taking a significant step forward in the cryptocurrency regulatory landscape. Governor Gavin Newsom has given the nod to a bill that will impose tighter regulations on businesses involved in cryptocurrency operations. This move is set to reshape the crypto business environment in the state by mid-2025.

The newly approved bill, named the ‘Digital Financial Assets Law,’ will necessitate both individuals and businesses to secure a license from the Department of Financial Protection and Innovation (DFPI) if they wish to partake in digital asset business activities. This legislation is slated to be operational from July 1, 2025.

Drawing parallels with California’s existing money transmission laws, the new bill emphasizes the need for crypto businesses to operate under a license granted by the DFPI Commissioner. However, the crypto bill takes it a step further. It empowers the DFPI to enforce rigorous audit requirements on cryptocurrency firms and mandates these firms to maintain comprehensive financial records.

The bill explicitly states that licensees must maintain specific records for a duration of five years post the activity date. This includes a detailed general ledger updated monthly, capturing all assets, liabilities, capital, income, and expenses of the licensee. Non-compliance with these stipulations will result in enforcement actions against the erring firms.

Interestingly, Governor Newsom had previously refrained from signing a similar bill last year. Despite the bill’s unanimous passage through the California State Assembly, Newsom felt it lacked the agility to adapt to the rapidly evolving crypto trends. He had then expressed his intention to await federal regulations before collaborating with the legislature on crypto licensing initiatives.

In related news, there are ongoing discussions at the federal level about the potential application of the Electronic Fund Transfer Act (ETFA) to cryptocurrencies. This is seen as a measure to counteract fraudulent transfers. Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), recently voiced his intent to authorize this move to “reduce harm of errors, hacks, and unauthorized transfers.”

California’s decision to introduce stricter regulations for cryptocurrency operations underscores the state’s commitment to ensuring a safe and regulated environment for digital assets. As the crypto industry continues to evolve, such regulatory measures are crucial in fostering trust and ensuring the protection of both businesses and consumers.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Bullish Times is a marketing agency committed to providing corporate-grade press coverage and shall not be liable for any loss or damage arising from reliance on this information. Readers should perform their own research and due diligence before engaging in any financial activities.