California Approves Digital Financial Assets Law Regulating Cryptocurrency Operations by 2025
Summary:
California Governor Gavin Newsom has approved the 'Digital Financial Assets Law' which imposes tighter regulations on cryptocurrency operations. Set to be implemented by July 1, 2025, the law mandates obtaining a license from the Department of Financial Protection and Innovation for individuals and firms to carry out digital financial asset business activities. The legislation will also allow the department to enforce strict audit and recording requirements on crypto businesses. Non-compliant firms could face enforcement penalties. Newsom had previously declined a similar bill, waiting for federal regulations to come into place before establishing crypto licensing initiatives.
The Governor of California, Gavin Newsom, has endorsed a new legislation promoting tighter controls on businesses dealing with cryptocurrencies, set to be enforced in around 18 months. His announcement on October 13 highlighted that the ‘Digital Financial Assets Law’ requires both firms and individuals to secure a license from the Department of Financial Protection and Innovation to participate in digital financial asset transactions. The law is planned to be put into action from July 1, 2025.
The new legislation is analogous to existing regulations in California on money transfers that restrict unauthorized money transactions without a license from the Commissioner of Financial Protection and Innovation. The fresh cryptocurrency-related law empowers the department to execute thorough audit regulations on crypto establishments, demanding them to maintain recording guidelines. The cited bill mentions the need for a licensee to preserve, for a term of five years post the activity, specific records encompassing a regularly updated general ledger listing all assets, liabilities, capital, income, and expenditure.
Newsom's statement further clarified that the businesses not adhering to the legislation will be under strict enforcement penalties. Noteworthy mention: CoinShares' comment on the US not being behind in crypto adoption and legislation.
Last year around this time, Newsom rejected a similar law introducing a regulatory and licensing system for digital assets in California. On September 25, Newsom turned down the legislation because it lacked the elasticity to match the rapid developments in the crypto sector. Newsom then stated he was waiting for federal laws to be enacted before collaborating with the assembly to set up initiatives for crypto licensing.
Furthermore, as per a recent report by Cointelegraph, the United States is considering invoking the provisions of the Electronic Fund Transfer Act (ETFA) to cryptocurrencies to prevent fraudulent transfers. Rohit Chopra, the Director of the Consumer Financial Protection Bureau (CFPB), recently expressed his desire to bestow authorization to use this to "diminish the detrimental effects of errors, hacks and unapproved transfers."
Trending magazine report: US government's mishandling affected Tim Draper's Bitcoin price prediction of $250K, Hall of Flame.
Published At
10/15/2023 12:50:09 AM
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