This bill requires digital asset exchanges and cryptocurrency businesses to obtain an operating license from the California Department of Financial Protection and Innovation. Any operations performed outside of the scope of the license will be banned. It would come into effect on and after January 1, 2025.
If these rules are not followed, violators may face a civil penalty of up to $100,000 per day of infringement.
The bill's proponent, Assemblyman Timothy Grayson (D-Concord), has claimed that he understands the enthusiasm around cryptocurrencies and digital assets. He said, “I'm impressed by the market's capacity to empower people to make financial investments and engage in a system that has often felt close to them.”
However, Grayson also stated that the novelty creates risks due to inadequate regulation. “This law will offer basic but vital consumer safeguards while also promoting a robust cryptocurrency industry by making it safer for everyone.”
The Money Transmission Act is the current legislation in the state of California. This legislation makes it illegal to operate a money transmission business without a valid license from the Commissioner of Financial Protection and Innovation.
If introduced, the proposed bill would also allow the government to conduct licensing investigations, among other things.
California regulators have been closely monitoring the crypto industry. In May, Newsom issued an executive order to unify the federal and state regulatory frameworks for blockchain. State lawmakers also advised citizens to exercise "extreme caution" while dealing with interest-bearing crypto-asset accounts.
This comes as a recent CoinGecko survey finds that, based on internet search data, California is the state most interested in Bitcoin (BTC) and Ether (ETH).
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