On June 1, the California Department of Financial Protection and Innovation (DFPI) released an invitation for comment on the DFPI’s regulatory approach to crypto asset-related financial products and services, as well as the potential regulation of such products and services under the California Consumer Financial Protection Law (CCFPL).

On May 4, Governor Gavin Newsom issued an executive order on blockchain, crypto assets, and the creation of a consistent federal and state regulatory approach (please see our blog post summarizing the order here). Among other things, the order empowered the DFPI to “exercise its authority under the [CCFPL] to develop guidance and, as appropriate, regulatory clarity and supervision of private entities offering crypto asset-related financial products and services[.]” Specifically, the order asked the DFPI to:

  • Within 30 days of the order, solicit public comments regarding the regulation of crypto asset-related financial products and services under the CCFPL; and
  • Commence a market-monitoring inquiry to solicit voluntary information from companies and licensees about their crypto asset-related financial products and services to assist the DFPI in undertaking any future efforts, including formal rulemaking under the CCFPL.

The invitation for comment splits its topics for comment into two parts: (1) regulatory priorities and (2) CCFPL regulation and supervision. The topics can be summarized at a high level as follows:

Regulatory Priorities

  • Consumer protection from scams and frauds;
  • Consumer education and outreach;
  • Consumer and investor protection in the offering and provision of crypto asset-related financial products and services;
  • Financial market stability;
  • Climate risks;
  • Harmonization and cooperation with federal and other state regulatory approaches; and
  • Regulatory guidance and clarity.

CCFPL Regulation and Supervision

  • Potential for regulations;
  • Potential for registration;
  • Inclusion of “crypto asset-related financial products and services” in definition of “financial product or service” under the CCFPL;
  • Potential for UDAAP regulations;
  • Potential for disclosure requirements;
  • Potential for reporting requirements; and
  • Market monitoring inquiry scope and procedure.

Comments may be submitted electronically or by mail by August 5, 2022.

Photo of Chris Capurso Chris Capurso

Chris focuses his practice on consumer financial services compliance, guiding clients through the many federal and state laws and regulations that impact consumer credit programs.

Photo of Kalama Lui-Kwan Kalama Lui-Kwan

Kalama represents parties in complex commercial disputes arising out of M&A deals. He also has a national litigation practice representing consumer-facing companies in class actions and regulatory investigations.

Photo of Keith J. Barnett Keith J. Barnett

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts…

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and state laws.

Photo of Carlin McCrory Carlin McCrory

A seasoned regulatory and compliance attorney, Carlin brings extensive experience representing financial institutions, fintechs, lenders, payment processors, neobanks, virtual currency companies, and mortgage servicers.

Photo of Addison Morgan Addison Morgan

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt…

Addison is an associate in the firm’s nationally recognized Consumer Financial Services Practice Group. He has represented several of the nation’s preeminent financial institutions in litigation arising under the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the FTC Holder Rule, and other consumer protection state analogs.