A bill approved by the California State Legislature and pending in the State Senate requires companies in the cryptocurrency industry to obtain a license from the State’s Financial Innovation Protection Agency (DFPI). Similar to the BitLicense Framework in New York, the Digital Financial Assets Act (DFAL) applies to businesses engaged in “digital financial asset business activities” that are broadly defined to include:
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- Engaging in the exchange, transfer, custody, or direct or indirect management of digital financial assets.
- Holds either an electronic precious metal or a digital certificate that represents an interest in precious metals, or issues a stock or digital certificate that represents an interest in precious metals.When
- The digital representation of the value of an online game can be either (1) a digital financial asset from the publisher who received the digital representation of the value, or (2) outside the game, in statutory currency or bank credit from the digital publisher. I received an expression of the value from the exchange.
In addition to licensing requirements, the bill requires the crypto business to:
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- Disclose information to customers, such as conflicts of interest and comprehensive tariffs.
- Keep records of all digital financial asset business activities for at least 5 years from the date of activity.
- Set up a 24-hour customer service telephone line.
- Create and maintain information security programs, operational security programs, business continuity programs, disaster recovery programs, fraud prevention programs, money laundering prevention programs, programs to prevent funding for terrorist activities, and program policies and procedures. We are dedicated to promoting compliance with state and federal law.When
- As with broker-dealers registered with the SEC, we consider the best interests of our clients who make investment recommendations and comply with the “best interests”.
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The bill will also allow DFPI to carry out licensee inspections.
Bill text can be found here..
