The bill will mandate crypto firms to uphold financial records and allow regulators to conduct audits on these entities.
California Governor Gavin Newsom has approved a cryptocurrency bill that enforces stricter regulations on businesses conducting crypto operations set to begin in 18 months.
In a statement published on October 13, Newsom declared that the bill titled the ‘Digital Financial Assets Law,’ will make it mandatory for both individuals and firms to obtain a Department of Financial Protection and Innovation (DFPI) license to engage in digital financial asset business activities.
The bill is scheduled to come into effect on July 1, 2025.
It draws a comparison to California's money transmission laws, which prohibit banking and transfer services from operating without a license granted by the DFPI Commissioner.
The new crypto bill will allow the DFPI to impose stringent audit requirements on crypto firms as well as force them to uphold recording requirements. The statement noted:
“[This bill] would require a licensee to maintain [...] for 5 years after the date of the activity, certain records, including a general ledger maintained at least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee.”
It furth clarifies that firms not complying with the bill will face enforcement measures.
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Around this time last year, Newsom declined to sign a similar bill that aimed to establish a licensing and regulatory framework for digital assets in California.
Although the bill passed through the California State Assembly without opposition, Newsom expressed that he was sending the bill back "without my signature."
Newsom suggested that the bill wasn't flexible enough to keep up with fast-changing crypto trends.
At the time, Newson stated that he was waiting for federal regulations to come into place before working with the legislature to establish crypto licensing initiatives.
Meanwhile, Cointelegraph recently reported that the U.S. is exploring the possibility of applying the Electronic Fund Transfer Act (ETFA) to cryptocurrencies as a measure to combat fraudulent transfers.
In a recent speech, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), expressed his intention to grant authorization for this to "reduce harm of errors, hacks and unauthorized transfers."
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