California Fingers Digital Financial Asset Businesses For Licensing

Last week, Assembly Member Grayson gutted and amended AB 2269 so as to create a "Digital Financial Assets Law".   This law would require persons engaging in digital financial asset business activity to be licensed or registered with the California Department of Financial Protection & Innovation.  Subject to certain exclusions, a "digital financial asset" would be defined as a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender.  The bill would authorize the DFPI to conduct examinations of licensees under the law and would impose books and records requirements on licensees.  Licensees would also be required to make certain disclosures and maintain policies and procedures for information and operational securities programs.

This legislative proposal follows Governor Newsom's recent executive order requiring the DFPI to "[i]nitiate enforcement actions as appropriate to stop violations of the CCFPL and other relevant consumer financial laws" (discussed in this post).