California Governor Signs Law Bringing State 'New Tools' to Regulate Crypto

The now-renamed California department responsible for the regulation of financial services will soon have more powers to supervise the cryptocurrency industry.

AccessTimeIconSep 29, 2020 at 9:19 a.m. UTC
Updated Sep 14, 2021 at 10:01 a.m. UTC

The California department responsible for the regulation of financial services will soon have more powers to supervise the cryptocurrency industry.

  • California Gov. Gavin Newsom signed a bill into law Friday to rename the California Department of Business Oversight as the Department of Financial Protection and Innovation.
  • The bill (AB 1864), introduced by lead author Assemblywoman Monique Limón (D-Santa Barbara) on Jan. 7, will go into effect on Jan. 1, 2021.
  • The changes will equip the regulator with "new tools to shape the regulation of virtual currency," the department's commissioner, Manuel P. Alvarez, told CoinDesk via email.
  • The new California Consumer Financial Protection Law will, among other things, provide the department with greater enforcement powers designed to protect Californians from "pandemic-inspired scams," per a Friday press release.
  • The move means the department will have new regulatory authority to begin cracking down on deceptive or abusive practices undertaken by unlicensed financial services or products.
  • But the new law will also see the creation of an Office of Financial Technology Innovation designed to engage with new industries and consumer advocates to encourage consumer-friendly innovation and job creation within the state.
  • In addition, a new Division of Consumer Financial Protection will be created to monitor markets, with a research arm that will keep up with emerging financial products such as cryptocurrencies.
  • With the expansion of the department, 90 additional employees will be added to the government payroll representing a 13% increase in staffing.
  • The legislation would allow his department to increase consumer protections without hamstringing "honest and fair operations," Alvarez said.

Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC