California has passed a groundbreaking Digital Financial Assets law, ushering in a new era of regulation for digital asset markets. Explore the key provisions and definitions of this landmark legislation.
On October 13, 2023, California implemented its inaugural Digital Financial Assets law, marking a significant step in regulating the realm of digital assets. This law introduces a comprehensive framework for overseeing digital asset markets, with a particular focus on crypto companies and their interactions with California residents.
A crucial aspect of this legislation is the definition of “digital financial asset,” encompassing digital mediums of exchange, units of account, and stores of value. Notably, it excludes certain transactions, digital representations of value in online games, and registered securities.
The heart of the law lies in its licensing requirements for what it terms “digital financial asset business activity.” This includes activities like exchanging, transferring, or storing digital financial assets and handling electronic precious metals. Furthermore, stablecoins, digital assets pegged to national currencies, are also a focal point of the regulation.
Come July 2025, crypto companies and others operating in the digital financial asset space must obtain licenses to continue their operations in California.