Assemblymember Grayson Introduces Legislation to License and Regulate Digital Financial Asset Businesses

For immediate release:

(SACRAMENTO, CA) – Today Assemblymember Timothy Grayson (D-Concord) announced that he has introduced legislation, sponsored by the Consumer Federation of California, which will establish the Digital Financial Assets Law to protect Californians from financial hardship and foster responsible innovation by licensing and regulating the activities of cryptocurrency exchanges.

 

“The excitement around cryptocurrency and digital financial assets is palpable, and I’m impressed by the market’s ability to help consumers feel empowered to make financial investments and participate in a system that has, in many cases, felt closed off to them,” said Assemblymember Grayson. “While the newness of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not adequately regulated and do not have to follow many of the same rules that apply to everyone else. This bill will provide consumers basic but necessary protections and will promote a healthy cryptocurrency market by making it safer for everyone.”

 

Cryptocurrency has grown significantly in recent years, with cryptocurrency assets surpassing a $3 trillion market cap last November. Unfortunately, this growth has been accompanied by fraud, insider trading, and other nefarious behavior by bad actors in the market. Such activity exposes Californians to unnecessary risk and harm. The standards in AB 2269 will instill faith in the cryptocurrency ecosystem and help create long-term stability of the market.

 

“Consumers need basic protections to ensure that they don’t get ripped off by financial schemes that prioritize unlimited instantaneous transactions more than protecting California consumers,” said Robert Herrell, Executive Director of the Consumer Federation of California. “CFC is pleased to work with Assemblymember Grayson on this critically important legislation that balances the need for innovation with the foundational notion that consumers must be protected. Fortune favors the balanced and wise, not just the so-called ‘brave’. Hundreds of millions in self-promotion from the crypto industry shouldn’t overshadow the need for solid consumer protection.”  

 

AB 2269 includes a number of crucial consumer and investor protections that will help ensure that cryptocurrency exchanges work on behalf of their customers, such as requirements around customer service and disclosures, and a requirement that the licensee acts in the best interest of a customer when it recommends a cryptocurrency. By licensing digital financial assets companies under the Department of Financial Innovation and Protection (DFPI), industry will receive necessary regulatory clarity and consumers will have established protections.

 

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Tim Grayson represents the 14th Assembly District that includes the communities of Benicia, Concord, Clayton, Martinez, Pleasant Hill, Vallejo, Pittsburg and Walnut Creek. For more information please visit the Assemblymember’s website, www.assembly.ca.gov/a14.