Golden State Guidelines: A Deep Dive Into California's New Virtual Currency Regulatory Framework

California governor Gavin Newsom signed two bills (Assembly Bill 39 and Senate Bill 401) into law on October 13, 2023¹, that will create an imposing regulatory framework for virtual currency regulation that will rival New York's "BitLicense" regulatory framework. California is the third state to introduce a licensing regime for virtual currency activity, after New York and Louisiana.

The first bill, the California Digital Financial Assets Law (DFAL) is a new virtual currency licensing and regulatory framework which requires entities conducting virtual currency business activity to obtain a license similar to New York's "BitLicense" and to comply with a slew of regulatory requirements such establishing and maintain compliance programs for anti-money laundering (AML), information security, fraud, consumer compliance and more. The second bill, Senate Bill 401, is related to the DFAL and specifically regulates digital financial asset transaction kiosks (e.g. Bitcoin