TechFlow News, February 18: According to Decrypt, the California Department of Financial Protection and Innovation (DFPI) recently officially released the implementing regulations for the Digital Financial Assets Law (DFAL). The regulations explicitly require any individual or entity providing cryptocurrency-related services to California residents to obtain a DFAL license, submit a license application, or secure an exemption by July 1, 2026—failure to do so will result in enforcement action. The license application portal will officially open on March 9 via the Nationwide Multistate Licensing System (NMLS), and the regulatory agency has scheduled an industry training session for March 23.
The DFAL was signed into law by California Governor Gavin Newsom in October 2023 and covers a broad range of cryptocurrency-related services—including cryptocurrency ATMs. It is widely compared to New York State’s BitLicense, introduced in 2015. At that time, major firms such as Kraken and Bitfinex withdrew from the New York market due to the heavy compliance burden. Approximately one-quarter of U.S. blockchain companies are currently based in California, and industry discussions have already emerged regarding concerns that this new regulatory framework could trigger a similar exodus.
Joe Ciccolo, Executive Director of the California Blockchain Advocacy Coalition, stated that clear and predictable rules can help attract legitimate operators and institutional capital—but small- and medium-sized enterprises with limited resources may choose to exit the California market. He also cautioned that if enforcement is perceived as overly stringent, affected businesses risk relocating operations overseas or underground.
