Assembly bill would help regulate cryptocurrency

(June 18, 2022) — In the Assembly, I have the pleasure of serving as chair of the Committee on Banking and Finance.

During my time with the committee, we have passed important consumer-focused legislation to crack down on predatory lenders, bank the unbanked and reduce the cost of business for California-based financial institutions. Recently, I introduced AB 2269, a bill that would license cryptocurrency – a financial product that is not adequately regulated.

Cryptocurrency has generated enthusiasm and excitement from people all across California and the world. At its most simple, cryptocurrency is a digital representation of value that is not issued or backed by the government or a central bank.

The cryptocurrency sector is rapidly growing. As of last November, crypto assets had surpassed a $3 trillion market cap. Bitcoin is the most well-known cryptocurrency, but Ethereum and Ripple are amongst other popular products.

Unfortunately, the cryptocurrency market is notoriously volatile and risky. Fraud and other illegal activity remain disturbingly common. According to Chainanalysis, an analytics firm, scammers took more than $7.7 billion of cryptocurrency assets from victims last year.

Stability

These issues jeopardize the long-term stability of cryptocurrency and expose Californians to unnecessary financial harm.

I believe cryptocurrency can be safer for everyone without jeopardizing innovation or financial inclusion. AB 2269 will establish the Digital Financial Assets Law to license and regulate the activities of cryptocurrency exchanges. If passed, this law will ensure that investors have some of the same common-sense protections that exist in other financial markets.

AB 2269 will help make sure the exchanges work on behalf of their customers, such as new customer service, transparency and disclosure requirements. It includes a requirement that the licensee acts in the best interest of a customer when it recommends a cryptocurrency.

By licensing digital assets companies under the Department of Financial Innovation and Protection (DFPI), the industry will receive the necessary regulatory clarity to innovate responsibly, and consumers will have established protections.

Risks

The excitement around cryptocurrency 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. However, I’ve heard stories from neighbors in our community – mainly young adults – who were exposed to social media crypto marketing and decided to invest, only to find themselves victims of financial scams without any avenue to receive financial restitution.

My hope is that AB 2269 will be the foundation to create a safer market for consumers, while also building long-term stability in these new digital financial assets.

If you are interested in learning more about my work on this bill or would like to talk about other matters important to you, please contact my Concord office at 925-521-1511.

Reach Assemblyman Tim Grayson at (925) 521-1511. Visit or write the district office 2151 Salvio Street, Suite P, Concord, CA 94520