On June 5, 2026, the California Department of Financial Protection and Innovation issued a second modified text of its proposed regulations under the Digital Financial Assets Law and related Money Transmission Act regulations. Comments on the second modified text and the addition of a document to the rulemaking file are due June 22, 2026.
The most important practical issue is the transition period for companies that intend to continue operating in California after July 1, 2026. That transition path comes from Financial Code section 3201(b), which allows a person to engage in digital financial asset business activity with or on behalf of a California resident if the person submits an application on or before July 1, 2026 and is awaiting approval or denial. Proposed section 1214 would clarify DFPI’s position that the application must be a completed application to rely on that pending application status.
The rulemaking has been pending since April 4, 2025, when DFPI first published proposed regulations addressing DFAL licensure and related MTA exemptions. DFPI issued a first modified text on September 29, 2025, which renumbered the proposed regulations, modified the MTA exemption, and made technical amendments. DFPI submitted the final rulemaking file to the Office of Administrative Law on March 30, 2026. OAL disapproved the package on May 12, 2026, and published its decision on May 19, 2026.
The June 5 second modified text is narrower than the earlier modifications and is intended to respond to OAL’s disapproval. DFPI revised proposed section 1212 to clarify that an applicant must complete Form MU1, which is then filed as part of the DFAL license application. DFPI also removed a prior provision concerning application deficiencies, explaining that an applicant’s failure to submit required information should be addressed through the methods already provided in the DFAL rather than through a new regulatory process.
DFPI also revised proposed section 1221 to clarify that changes involving executive officers, control persons and responsible persons are subject to the reporting requirements. In addition, DFPI modified proposed section 1230 to clarify the factors the Commissioner will consider in setting a surety bond amount, the relevant claims period for a bond, and that a surety bond is not the only form of security that may satisfy Financial Code section 3207.
The broader DFAL licensing framework remains largely unchanged. Applications would be filed through NMLS and would require, among other things, business plans, descriptions of digital financial asset business activity, organizational documents, financial statements, consumer disclosures, compliance policies and procedures, and information regarding executive officers, control persons and responsible individuals.
The proposal also continues to address the relationship between digital financial asset activity and California’s Money Transmission Act. The regulations would provide that monetary value under the MTA does not include a digital financial asset and would create exemptions for certain Digital Financial Asset Law Persons engaged in digital asset related money transmission activity, including transmitting payment for the purchase or exchange of digital financial assets, transmitting sale or exchange proceeds, and issuing stored value usable exclusively for digital financial asset transactions.For covered exchanges, the proposal would require a token listing certification before listing or offering a digital financial asset for exchange on behalf of a California resident. The certification would address securities law risk, conflicts of interest, consumer protection risk assessments, continued listing review and delisting procedures.