Assembly Bill 39 will establish a licensing process for crypto exchanges and provide consumers with needed protections. Senate Bill 401 will establish safeguards for crypto kiosks.
(SACRAMENTO, CA) – On Friday, Oct. 13, 2023, Assembly Bill 39, authored by Assembly Banking and Finance Chair Timothy Grayson (D-Concord) and co-authored by Senate President pro Tempore Toni G. Atkins (D-San Diego), Senate Banking and Financial Institutions Chair Monique Limón (D-Santa Barbara), and Assemblywoman Cottie Petrie-Norris (D-Irvine), was signed by Governor Gavin Newsom. AB 39 will establish a licensing program for crypto assets within the Department of Financial Protection and Innovation (DFPI) to protect Californians from bad actors and foster responsible innovation. The bill represents a major victory for responsible innovators and California consumers.
AB 39’s lead author, Assemblymember Grayson, released the following statement:
“Today California is taking the necessary step to regulate a market that is volatile, risky, and, in some cases, deliberately rigged against everyday consumers. Because of today’s action, Californians can be confident that crypto businesses, like any other company in financial services, must follow reasonable rules that will protect consumers and their money. Thank you to Governor Newsom for helping ensure that our state leads in fostering responsible innovation.”
Assembly Bill 39 is a companion bill to Senate Bill 401 (Limón and Atkins), which will set a regulatory framework for crypto kiosks, a part of the crypto industry rife with fraud and abuse. Crypto kiosks are ATM-like machines that allow consumers to purchase cryptocurrencies such as Bitcoin. However, these machines charge exorbitant fees and are hubs of criminal activity, scams, and consumer fraud.
“With the important frameworks established by AB 39 and SB 401, California will begin the challenging task ahead of us to regulate cryptocurrency and ensure that no Californian falls prey to scams, investment related fraud, or high-fee asset withdrawal schemes,” said California Senate President pro Tempore Toni G. Atkins. “Failures in crypto markets in recent years have emphasized the need for regulatory frameworks that have the backs of consumers, and Assemblymember Grayson and Senator Limón have led the way in doing just that.”
“California is taking a step in the right direction to protect California consumers from fraud, unnecessary risk, and potentially criminal activity with the signing of SB 401 and AB 39,” said Senator Monique Limón. “I am grateful that Governor Newsom sees the benefits to establishing a clear framework that allows for innovation without harming California consumers.”
Senate Bill 401 was signed into law, along with Assembly Bill 39.
“The Consumer Federation of California thanks Governor Newsom for signing these two important bills protecting consumers in the crypto marketplace,” said Robert Herrell, Executive Director of Consumer Confederation of California. “California now retakes its rightful position near the top of states protecting consumers in the crypto market. We also profoundly thank Assemblymember Grayson and Senators Limón and Atkins for their perseverance on these issues. Consumers will be better protected in crypto thanks to these new laws.”
With the Governor’s signature of these measures, crypto companies and crypto kiosk operators must obtain or apply for a license by July 1, 2025, to continue doing business in California. Additional information and the text of both bills can be found here.