On June 7, 2022, California State Assembly Banking and Finance Committee Chairman Timothy Grayson introduced a bill, Assembly Bill (AB) 2269, sponsored by the California Consumer Federation, which will establish the Digital Financial Assets Act. The legislation aims to provide the cryptocurrency industry with regulatory clarity and consumer protection by licensing and regulating the activities of cryptocurrency exchanges.
AB 2269 requires individuals and entities engaged in digital financial asset business to meet certain criteria, including obtaining a license from the Department of Financial Innovation and Protection (DFPI). Such a license allows the DFPI to conduct reviews of a licensee and require licensees to maintain records of all digital financial business activity for five years after the date of the activity. The legislation also authorizes the DFPI to take enforcement action against a licensee or person conducting unlicensed digital financial business activities and provides for civil penalties for violations of its provisions. The legislation would also establish a “best interest standard”, requiring licensees to exercise due diligence and consider the best interests of their clients before recommending investments. Other consumer protections include requiring licensees to disclose certain information to customers regarding fees and charges and requiring licensees to offer live customer service lines to handle complaints and problems around the clock, as the crypto markets are always open.
The California State Senate and Assembly briefly weighed two bills that would have allowed crypto to flow through state institutions, but they failed early amid general legislative distrust and backlash. opposition from the State Comptroller. Additionally, in May 2022, California Governor Gavin Newsom issued an executive order to encourage the development of crypto asset regulations and outline the state’s approach to integrating cryptocurrency into the financial landscape. Californian. See GT Alert.
AB 2269 was announced the same day. American senses Kirsten Gillibrand and Cynthia Lummis have introduced new federal legislation on creating a regulatory framework for digital assets such as cryptocurrency. Such legislative moves signal changing opinions statewide and nationally on the integration of cryptocurrency and blockchain technology into the nation’s regulated financial system.