USA – CALIFORNIA Trends and Developments Contributed by: Ryan David Williams, Betsie Stukenborg and Lauren Simon, Ashbury Legal
Conclusion The DFAL represents a significant shift towards nor- malising and institutionalising digital asset activity in California. By requiring businesses engaged in digital financial asset activity to obtain licensure and to oper- ate in a supervisory and consumer-protection frame- work, the DFAL signals that this industry is no longer exploratory or speculative but is increasingly compa- rable to traditional financial services. At the same time, the DFAL leaves important questions open, includ- ing how the thresholds for “control” will be applied in practice, which business models may be exempted and how the DFAL will interact with the existing state MTA and the new federal GENIUS Act. Given the size of California’s economy and the DFAL’s reach beyond the state, the impact of the DFAL will undoubtedly reverberate throughout the national economy. Busi- nesses engaging in digital asset activity should take note and be prepared to act by the 1 July 2026 dead- line.
However, the federal Guiding and Establishing Nation- al Innovation for US Stablecoins Act (the “GENIUS Act”) was enacted on 18 July 2025 and creates federal compliance obligations for payment stablecoin issu- ers. The GENIUS Act pre-empts state law (including the DFAL) with respect to payment stablecoin issuers who have been federally qualified or subsidiaries of insured depository institutions or credit unions, but does not on the face of it pre-empt the DFAL with respect to exchanges, custodians or ATMs. The GENI- US Act allows payment stablecoin issuers who hold no more than USD10 billion in outstanding payment stablecoins to opt for regulation under state regula- tions instead of the GENIUS Act, provided the state government submits a certification to the federal gov- ernment certifying that the state law is substantially similar to the GENIUS Act. The deadline for California to submit such certification with respect to the DFAL is 18 July 2026. As a result, the interplay between the GENIUS Act and the DFAL is not yet settled and will no doubt be an area of ongoing development.
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