California Expands Digital‑Asset Oversight Beyond DFAL in 2026
California continues to position itself as one of the nation’s most influential digital asset regulatory jurisdictions. The most immediate issue for many industry participants is implementation of California’s Digital Financial Assets Law (DFAL), which became operative July 1, 2026. Recent legislation and pending bills demonstrate California’s continued movement beyond exchange regulation toward a broader framework governing licensing, custody, anti-money-laundering enforcement, unclaimed digital assets, fiduciary access, public-integrity concerns, and the role of banks and credit unions in digital asset markets.
Recent legislation and pending bills also demonstrate an emerging federal-state realignment. Notably, SB 97 removes DFAL’s standalone stablecoin chapter while preserving California’s broader licensing and supervisory structure. At the same time, the failure of AB 2285, the Digital Financial Asset Banking Law (DFAB), highlights continuing disagreement regarding staking, custody, securities treatment, and bank participation in digital asset activities, issues likely to return in future legislative sessions.
Key Measures to Know
| Measure | Status | Core Issue | Why It Matters |
| SB 97 (Grayson) | Enacted | Repeals DFAL’s standalone stablecoin chapter, narrows regulated activity, and clarifies key exemptions and licensing requirements. | Makes DFAL implementation more workable while reflecting California’s willingness to defer portions of stablecoin regulation to emerging federal frameworks. |
| SB 1208 (Grayson) | Pending | Extends money laundering and forfeiture laws to digital financial assets and authorizes seizure of wallets and digital asset accounts. | Could become one of the most significant state-level digital asset enforcement statutes in the country, with debate focusing on due process, custody, forfeiture, and victim restitution. |
| AB 2335 (Valencia) | Pending | Creates a Digital Asset Claims Reserve Account, Digital Asset Reserve Fund, and Digital Asset Reserve Board; establishes rules for custody, liquidation, and claimant recovery. | Moves beyond traditional unclaimed-property administration and raises broader questions regarding government custody and management of digital asset-related reserves. |
| AB 2409 (Valencia) | Pending | Prohibits specified public officials from issuing meme coins and restricts certain listings. | Signals California’s effort to integrate digital assets into existing ethics, disclosure, and public-integrity frameworks. |
| AB 2199 (Macedo) | Enacted | Expands statutory power-of-attorney authority over digital assets and electronic communications. | Relevant for custodians, fiduciaries, estate planners, trust administrators, and wealth-management platforms. |
| SB 122 | Enacted | Expands California taxation of software and SaaS products. | Although not directed at digital assets, this measure may increase operating costs for exchanges, custodians, tokenization platforms, analytics providers, and other technology-intensive digital asset businesses. |
AB 2285: Why the Digital Financial Asset Banking Act Still Matters
AB 2285 did not advance after its June 29, 2026, Senate Judiciary Committee hearing was canceled and the bill failed to meet the second house policy deadline. Nonetheless, it remains one of the session’s most significant digital asset proposals.
The DFAB, as proposed, would have created a framework for state-chartered banks and credit unions to offer digital asset custody, transaction, and staking — the process by which digital asset holders lock up assets to help validate blockchain transactions and earn rewards in return — services, subject to extensive compliance, audit, cybersecurity, disclosure, AML, and custody requirements. Its most debated feature concerned staking. Supporters argued that California institutions should remain competitive with banks in other jurisdictions, while opponents contended that exempting staking rewards from securities treatment could weaken investor protections and the Department of Financial Protection and Innovation’s oversight.
The bill’s failure reflects continuing disagreement over staking, securities regulation, consumer protection, and the role of traditional financial institutions in digital asset markets — issues that may resurface in future legislative sessions.
Political & Regulatory Outlook
California appears committed to maintaining a comprehensive digital asset regulatory framework. Measures framed as implementation, consumer protection, public integrity, or enforcement have continued to advance more readily than proposals perceived as limiting regulatory authority or investor protections.
For the remainder of 2026, principal issues to monitor include DFAL implementation, California’s evolving relationship with federal stablecoin regulation, the future of staking and custody regulation following AB 2285, and growing legislative attention to digital asset ownership, recovery, forfeiture, inheritance, and unclaimed property matters.
For most businesses, licensing and compliance under DFAL remain the most immediate operational priority.
