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Cryptocurrency exchanges, digital asset custodians, and crypto kiosk operators in California face comprehensive new licensing requirements under the Digital Financial Assets Law (DFAL). On October 13, 2023, Governor Newsom signed into law Assembly Bill 39 and Senate Bill 401, together called the Digital Financial Assets Law. Later, on September 29, 2024, Governor Newsom signed AB 1934 which extended the date of licensure under DFAL from July 1, 2025 to July 1, 2026. The DFAL provides DFPI with rulemaking authority and an operative date of July 1, 2026 to ensure the regulatory framework is thoughtfully tailored to provide investor and consumer protections and address the crypto asset industry. Law Offices of Alan Abergel, P.C. ("LOAA") provides comprehensive legal services to California providers of digital financial assets services including DFPI licensing assistance, compliance program development, and regulatory defense.
Attorney Alan Abergel is licensed by both the State Bar of California and the State Bar of Texas, allowing the firm to serve digital asset businesses in both major markets. LOAA represents California providers of digital financial assets services—the firm does not represent consumers. This focused practice enables deep expertise in DFAL licensing requirements, cryptocurrency regulations, and the evolving legal landscape for digital asset businesses.
Beginning July 1, 2026, companies must be licensed by DFPI or have applied for a license with DFPI to operate in California. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from DFPI. Digital financial business activity includes activities such as exchanging, storing, or transferring a digital financial asset, such as a crypto asset. The new law promotes consumer and investor protection by creating a regulatory framework, including supervision and enforcement authority, for certain crypto activities.
LOAA provides comprehensive assistance with DFPI's DFAL license application. The licensing process requires detailed applications providing information about the entity, its owners, officers, and operations, disclosure of digital asset services provided to California residents, financial information demonstrating operational capacity and capital adequacy, background checks for principals and controlling persons, cybersecurity and information security measures, and compliance documentation including customer agreements, disclosure forms, and operational policies.
DFAL licensing covers various digital asset business activities including cryptocurrency exchanges facilitating trading between digital assets and fiat currency, digital asset custodians holding or controlling customer digital assets, digital asset transfer services, stablecoin issuance and redemption, and other activities involving digital financial assets. LOAA provides legal opinions about various business models concerning whether they are subject to the licensing and compliance requirements of DFAL.
The DFAL also requires a digital financial asset transaction kiosk operator to comply with certain requirements in California. Kiosk operators—defined as persons who own, operate, or manage digital financial asset transaction kiosks located in California—face immediate and phased-in compliance obligations separate from the July 1, 2026 general licensing requirement.
LOAA assists kiosk operators with compliance and preparing for July 1, 2026 licensing requirements. Kiosk operators face unique challenges given the immediate compliance deadlines and specific operational restrictions.
LOAA provides drafting of documents required to comply with federal and California legal requirements and applicable DFPI regulations, including legal documents required to be included in DFAL license applications. California DFPI requires various compliance items and documents to be submitted with DFAL license applications. Unlike some licensing contexts, DFPI reviews compliance documentation as part of the licensing process, meaning comprehensive compliance work must be completed before applications can be filed.
Required documentation for digital asset businesses includes customer service agreements for digital asset exchanges, custody, or transfer services, terms of service for platforms and applications, privacy policies addressing digital asset transaction data, cybersecurity policies and incident response plans, anti-money laundering and Bank Secrecy Act compliance programs, consumer disclosure statements explaining risks and fees, and operational policies addressing customer protection, asset segregation, and business continuity.
Beyond California DFAL requirements, digital asset businesses must comply with federal regulations. FinCEN treats many digital asset businesses as money services businesses requiring Bank Secrecy Act compliance including FinCEN registration, anti-money laundering program implementation, suspicious activity reporting, currency transaction reporting, and OFAC sanctions screening. LOAA assists digital asset businesses with federal BSA/AML compliance, FinCEN registration, and implementation of required controls.
Securities and Exchange Commission oversight applies when digital assets constitute securities or when businesses operate as exchanges, broker-dealers, or investment advisers. Determining whether specific digital assets are securities requires analysis under securities laws. The firm provides legal opinions on securities law implications of digital asset offerings and operations.
Commodity Futures Trading Commission jurisdiction extends to digital assets deemed commodities, particularly Bitcoin and Ethereum. CFTC regulates derivatives and futures on digital assets. LOAA advises on CFTC compliance when digital asset businesses involve commodity derivatives or futures trading.
The rapidly evolving digital asset industry creates uncertainty about regulatory requirements. LOAA provides legal opinions about various business models concerning whether they are subject to licensing and compliance requirements of DFAL. This analysis helps businesses understand obligations before launching operations or investing in California expansion.
Questions requiring legal opinions include whether specific digital asset services constitute licensable activities. The firm analyzes these issues and provides written opinions documenting regulatory conclusions.
LOAA provides representation in investigations, administrative procedures, inspections, and audits by DFPI, FTC, and CFPB. Digital asset businesses may face enforcement for operating without required licenses, failing to implement adequate consumer protections, cybersecurity failures compromising customer assets, misleading marketing or disclosure failures, and money laundering control deficiencies. The firm defends digital asset businesses in DFPI proceedings.
FTC enforcement addresses deceptive advertising and unfair practices in digital asset offerings. CFPB oversight focuses on consumer financial protection in digital asset products. The firm represents digital asset businesses in multi-agency enforcement, coordinating responses across regulatory forums.
Digital asset businesses must prepare for DFAL licensing deadlines. LOAA assists with compliance assessment identifying which activities require licensing, analysis comparing current operations to DFAL requirements, compliance program development addressing identified gaps, documentation preparation for license applications, and planning for licensing timelines and operational changes.
Early preparation is essential given the complexity of DFAL requirements and DFPI's need to process numerous applications. Businesses should begin compliance preparation well in advance of July 1, 2026 to ensure timely licensing and avoid operating unlawfully after the deadline.
Whether obtaining DFAL licenses, ensuring kiosk operator compliance, developing compliant digital asset business operations, responding to regulatory investigations, or navigating federal cryptocurrency regulations, experienced legal counsel makes a significant difference. Law Offices of Alan Abergel, P.C. provides comprehensive legal services to California providers of digital financial assets services. Contact LOAA to discuss your digital asset business legal needs.
Disclaimer: The information on this page is provided for general informational purposes only and does not constitute legal advice. No attorney-client relationship is created by reading this content. Every legal matter is unique, and you should consult directly with a qualified attorney regarding your specific circumstances.
"I engaged Alan to help me through the complexities of obtaining my Lenders License. He was very knowledgeable about the process and provided me with a high level of service.I worked quickly getting him all the information needed and he worked at my pace. He was responsive to e-mails and questions and followed up with the DFPI to make sure everything was filed correctly.I had read online that this process could take as long as 6 months however Alan completed the assignment in less than 3 I will be retaining his services in the future to ensure my company remains in compliance."
-Petroleum Realty Group Inc.
"I hired Alan to represent me as a mortgage broker before the California Department of Real Estate. I couldn't be more pleased with Alan's services from start to finish. Alan was clear and concise. Alan's communication throughout the process was professional. I received the results I hoped for. Thank you Alan. I'll definitely recommend you to ALL and use your services again in the future shall I need anything!"
-Anonymous
"Very helpful in assisting in obtaining an OCCC Texas Motor Vehicle Sales Finance License. Very knowledgeable in answering all questions the OCCC asked for on their questionnaire. Highly recommended and would re-hire for any future assistance regarding motor vehicle and finance business. God Bless!"
-Raul
