Navigating Cryptocurrency Regulations in California: What Cerritos Residents Need to Know

As cryptocurrency adoption continues to grow, Cerritos residents should be aware of California's evolving regulatory landscape for digital assets.

California recently enacted the Digital Financial Assets Law (DFAL), which will impact how cryptocurrencies are bought, sold, and used in the state. The law, signed by Governor Gavin Newsom in October 2023, will take effect on July 1, 2025.

The DFAL establishes a licensing regime for cryptocurrency companies operating in California. Companies engaging in “digital financial asset business activity” with California residents will need to obtain a license from the Department of Financial Protection and Innovation (DFPI).

This includes businesses involved in the following activities:

Buying or selling digital financial assets on behalf of customers

Providing digital financial asset custody services

Operating a digital financial asset exchange

The law also includes consumer protections. Licensed businesses will be required to meet strict standards, including:

Maintaining adequate capital reserves

Undergoing regular audits

Providing clear and concise disclosures to customers

The DFAL also places specific restrictions on stablecoins. Stablecoins are a type of cryptocurrency that is pegged to the value of a fiat currency, such as the US dollar.

Under the law, stablecoin issuers will be required to maintain a reserve of fiat currency or other assets that is at least equal to the value of the stablecoins in circulation.

Issuers will also be prohibited from using the reserves for any purpose other than to redeem stablecoins.

The law’s impact on Cerritos residents will vary depending on their level of involvement in the cryptocurrency market. However, some key points to keep in mind include:

Cerritos residents can still buy, sell, and use cryptocurrencies, but should be aware of the following:

After July 2025, ensure you’re using licensed platforms for cryptocurrency transactions. This will provide enhanced consumer protections and reduce the risk of fraud or mismanagement. If you’re looking to invest in specific cryptocurrencies like Bitcoin, Ethereum, or even altcoins such as Tron, it’s crucial to use trusted platforms.

The IRS treats cryptocurrencies as property, meaning transactions may be subject to capital gains taxes. Cerritos residents should:

The DFPI is likely to increase efforts to educate consumers about the risks and benefits of cryptocurrencies. Cerritos residents should take advantage of these resources to make informed decisions.

The new regulations aim to provide stronger safeguards for consumers, potentially reducing the risk of scams and fraudulent activities in the crypto space.

Cerritos businesses interested in accepting cryptocurrency payments or engaging in crypto-related activities should consider the following:

Keep track of the evolving regulatory landscape and any additional guidance from the DFPI.

This may include:

If engaging in certain cryptocurrency activities, evaluate the potential need for licensing and associated compliance requirements. This may involve:

Research reputable cryptocurrency payment processors that can help navigate regulatory requirements. Look for processors that:

Conduct a thorough risk assessment of incorporating cryptocurrency into your business model, considering factors such as:

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