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Licensees, exchanges, and other market participants should prepare to comply with the listing, disclosure, capital, and other requirements that the new law imposes.

By Jenny Cieplak, Nima Mohebbi, Parag Patel, Stephen P. Wink, Ian Irlander, Adam Zuckerman, Luca Marquard, and Deric Behar

On October 13, 2023, California Governor Gavin Newsom signed California State Assembly Bill 39, which establishes the Digital Financial Assets Law (DFAL). The new law, which goes into effect on July 1, 2025, makes California only the second state after New York to adopt comprehensive regulation of digital financial assets[1] and associated service providers.

The DFAL authorizes the California Department of Financial Protection and Innovation (DFPI) to administer its provisions and requirements, which apply to the digital asset business activity of a person or entity (Covered Persons) engaging in, or holding itself out as being able to engage in, activities with California residents relating to the exchange, transfer, storage or “administration” of a digital asset,[2] whether indirectly or through a vendor.

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The bipartisan bill would provide a federal safe harbor for non-custodial blockchain service providers from state money transmission and digital asset licensing laws.

By Arthur S. Long, Parag Patel, Yvette D. Valdez, Stephen P. Wink, Pia Naib, and Deric Behar

On March 23, 2023, US House of Representatives Majority Whip Tom Emmer (R) and Representative Darren Soto (D) introduced the Blockchain Regulatory Certainty Act (the Bill).

The short Bill is singular in purpose: it would…

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Custodia Bank was denied Federal Reserve membership, while certain crypto principal activities are deemed presumptively not appropriate for member banks.

By Arthur S. Long, Pia Naib, and Deric Behar

On January 27, 2023, the Board of Governors of the Federal Reserve System (Federal Reserve) took two actions, clarifying that it considers many cryptocurrency activities to be inconsistent with the business of banking. First, the Federal Reserve announced that it had denied the application of Custodia Bank, Inc. (Custodia)…

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The Guidance clarifies the regulator’s expectations on safekeeping customer digital assets, and the disclosures that must accompany such arrangements.

By Arthur S. Long, Parag Patel, Marlon Q. Paz, Yvette D. Valdez, Barrie VanBrackle, Pia Naib, Donald Thompson, and Deric Behar

On January 23, 2023, the New York Department of Financial Services (NYDFS) published Guidance on Custodial Structures for Customer Protection in the Event of Insolvency (the Guidance). It guides virtual currency entities (VCEs)…