California Enacts Landmark Crypto Licensing Law

To date, crypto companies have been able to operate in California without a license, but that will change effective July 2025 under the state's newly-enacted "Digital Financial Assets Law" (the Law), signed by Governor Newsom on 13 October. The Law is California's first comprehensive framework to regulate the digital asset market in the state, including specific provisions for stablecoins.

Under the Law, unless exempted, businesses must obtain a license and comply with various prudential requirements, recordkeeping rules, and disclosure requirements to engage in (or hold themselves out as engaging in) "digital financial asset business activity" with or on behalf of a California resident (as defined). The term digital financial asset is defined as digital mediums of exchange, units of account, or stores of value. The definition of digital financial asset business activity—i.e., those activities that trigger the licensing requirement—is expansive: "(1)