California Governor Gavin Newsom has signed a new state law under which the Department of Financial Protection and Innovation will oversee the cryptocurrency industry.
Under the new law, the California Department of Business Oversight will be renamed the Department of Financial Protection and Innovation. The changes will provide the regulator with “new tools to shape cryptocurrency regulation,” said department commissioner Manuel P. Alvarez.
The AB Bill 1864 was proposed by MP Monique Limón and will enter into force on 1 January 2021. According to the press release , California’s new consumer financial protection law will, among other things, give the Department broader enforcement powers to protect California residents from “coronavirus-related fraud.”
This means that the Department will have new regulatory powers that will allow it to begin fighting fraud of unlicensed financial services or products. The law will create a Fintech Innovation Authority to engage with emerging industries and consumer advocacy to foster innovation and job creation in the state.
In addition, a new consumer financial protection unit with a research department will be created to monitor markets to monitor new financial products related to cryptocurrencies. As part of the expansion of the department, 90 additional staff will be hired. The regulation will allow the department to strengthen consumer protection without restricting “fair and equitable transactions,” Alvarez said.
As a reminder, in May, California lawmakers proposed excluding digital assets from the definition of securities.