On September 29, the California Department of Financial Protection and Innovation (DFPI) announced significant modifications to the proposed regulations under the Digital Financial Assets Law (DFAL) and the Money Transmission Act (MTA). These changes are part of an ongoing effort to refine the regulatory framework governing digital financial assets and ensure clarity in the application of these laws.
Initially proposed on April 4, 2025, the regulations aimed to establish clear licensure requirements under the DFAL and delineate exemptions from the MTA for certain digital asset activities. The proposal underwent a public comment period, concluding on May 19, 2025, during which the DFPI received valuable feedback from various stakeholders.
Key Modifications
Renumbering and Reorganization:
The proposed regulations have been renumbered and reorganized to avoid duplication and enhance clarity. The DFAL regulations have been moved from Subchapter 16 to Subchapter 5 of Title 10, with sections renumbered accordingly.
Exemptions under the MTA:
The modifications clarify exemptions for digital financial asset transactions from the MTA. Specifically, activities now regulated under the DFAL, such as transmission and storage of digital assets, are exempt from the MTA to prevent redundant regulation. New sections, such as § 80.126.40, define “Monetary Value” to exclude digital financial assets, while § 80.159.10 defines “Digital Financial Asset” as per Financial Code § 3102.
Technical Amendments:
Several technical amendments were made to improve clarity and alignment with statutory language. For example, the definition of “control” in § 1200 was refined to align with Financial Code § 3309, emphasizing that the presumption of control is rebuttable.
Token Listing Certification:
Section 1250 introduces a certification requirement for covered exchanges listing digital financial assets, ensuring compliance with disclosure and risk assessment protocols.
The DFPI has opened a new comment period for these modifications, running from September 29, 2025 to October 15, 2025.
Conclusion
These regulatory updates reflect California’s commitment to fostering a clear and effective regulatory environment for digital financial assets. By refining these regulations, the DFPI aims to balance consumer protection with the facilitation of innovation in the financial sector. Stakeholders should review the proposed changes and participate in the comment process to ensure their perspectives are included in the final regulatory framework.
