USA – CALIFORNIA Trends and Developments Contributed by: Ryan David Williams, Betsie Stukenborg and Lauren Simon, Ashbury Legal
Ashbury Legal 600 California Street, 11th Floor San Francisco CA 94108 USA Tel: +1 415 582 4940
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California’s Regulation of Digital Assets With the Digital Financial Assets Law (DFAL) set to become fully effective on 1 July 2026, California con- tinues to deepen its leadership role in the research, recognition and regulation of digital assets. Cali- fornia’s economic scale and its status as a hub for emerging technologies make its business regulations particularly consequential, especially in less-chart- ed financial territories such as cryptocurrency and blockchain. After years of attention and research in the California legislature, the DFAL is the state’s most comprehensive cryptocurrency regulation yet, captur- ing a wide range of businesses using digital assets in California or with California residents. Coming years after New York’s BitLicense and on the heels of new federal initiatives, the new California law has a delib - erately broad reach and must be considered by any business engaging in cryptocurrency transactions within California or with, or on behalf of, residents of the state. While the DFAL will no doubt herald a new era of heightened regulation, it also marks a further legitimisation and institutional acceptance of digital assets as part of the mainstream financial landscape. History of Digital Asset Regulation California has been engaged in the regulation of digital assets for over a decade. Putting the DFAL into his- torical context, the following are some notable actions taken within the State of California since the emer- gence of crypto. • In 2015, responding to the popularisation of Bitcoin and other cryptocurrencies in the state, the leg- islature enacted the California Alternative Cur- rencies Act. This legislation overturned previous
long-standing laws that prohibited the use of any currency outside of US dollars in commerce, and stated that the use of digital currency to purchase goods and services did not violate state laws. This was a significant movement in the legitimisation and normalisation of cryptocurrency. • In 2018, the California Blockchain Working Group was established to evaluate potential uses, risks and legal concerns associated with the use of blockchain. The group was established to consider use cases for blockchain and propose neces- sary statutory amendments. In 2020, the working group delivered its report, which provided a formal definition of blockchain, potential applications for the use of blockchain and proposed legislation and legislative amendments. The working group was the state’s first formal endeavour to create mean- ingful state policy on blockchain. • In 2022, California Governor Gavin Newsom signed an executive order to create a transparent con- sumer-focused regulatory approach to blockchain and crypto-assets. Addressing both the size of California’s economy and its reputation as a global innovation hub, this executive order proposed a proactive approach to blockchain regulation and set in motion a number of regulatory initiatives through collaboration between various government departments. • In June 2025, the California State Assembly unani- mously passed AB 1180, which would allow state agencies to accept cryptocurrency as payment for any fees required by the DFAL, paving the way for fully on-chain companies to operate in Califor- nia. This legislation is still pending passage by the State Senate.
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