United States of America: Signed Digital Financial Asset Bill (AB 39)

On 13 October 2023, the Governor of California signed the Digital Financial Asset Bill (AB 39) into law. The Bill defines digital financial assets as a “digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender” and outlines licensing requirements. In particular, the Bill would require entities to obtain a licence from the Department of Financial Protection and Innovation before engaging in digital financial asset business activities. The Bill outlines exemptions from the requirements, examinations of licensees, record-keeping requirements, penalties for violations and disclosure requirements for fees. Finally, the entities must establish and follow security policies and procedures.