An act to amend Sections 3102, 3103, 3201, 3205, 3211, 3307, 3501, 3505, and 3701 of, and to repeal Chapter 6 (commencing with Section 3601) of Division 1.25 of, the Financial Code, relating to financial regulation, and declaring the urgency thereof, to take effect immediately.
SB 97 revises California’s Digital Financial Assets Law, which regulates digital financial asset business activity, including exchanges, transfers, storage, and certain stablecoin-related activities. The bill updates licensing and compliance rules for covered persons and licensees, including requiring a completed application to qualify for the July 1, 2026 transition period, extending the New York conditional-license shortcut to firms licensed or approved by January 1, 2025, and narrowing or clarifying several exemptions. It also removes certain game-related digital value from the definition of regulated digital financial asset business activity and adds an exemption for affinity or rewards-program value and certain publisher-issued in-game value that is not otherwise a digital financial asset.
The bill also strengthens and refines disclosure, reporting, and supervisory requirements. It changes annual reporting to focus on material data security breaches or cybersecurity events, requires reporting of business changes that may raise material safety and soundness or operational concerns, and adds an up-to-date description of order execution practices for covered exchanges. It modifies consumer disclosure rules so the 14-day advance notice requirement does not apply to certain risk-of-loss changes, and it broadens the category of security-sensitive policies and procedures that need not be disclosed separately. For stablecoins, the bill expands the factors the commissioner must consider before approving a stablecoin for use in California and clarifies when approvals may be revoked.
SB 97’s impact on state law is significant because it amends multiple sections of the Financial Code governing digital financial assets, licensing, consumer disclosures, exchange practices, reporting, and stablecoin approvals. It also updates the scope of regulated activity and exemptions, which affects digital asset businesses, merchants, exchanges, wallet providers, and stablecoin issuers operating in or serving California residents. The bill was ultimately chaptered as an urgency measure, meaning it took effect immediately upon enactment.
The general sentiment around the bill appears strongly favorable and largely noncontroversial in committee and floor votes. The recorded votes were unanimous or near-unanimous at each stage, with no recorded opposition in the provided history. That pattern suggests broad support for the bill’s mix of consumer-protection, market-clarification, and regulatory-update provisions.
The main points of contention, based on the text rather than recorded debate, are likely to have centered on the balance between consumer protection and operational flexibility for the industry. The bill relaxes some notice requirements for risk-mitigation changes while also imposing more detailed stablecoin review factors and execution-disclosure obligations, so stakeholders could differ on whether it goes far enough to protect consumers or whether it adds unnecessary compliance burdens. Another likely issue is the treatment of in-game value and rewards programs, which narrows the law’s reach and may have been important to gaming, payments, and fintech stakeholders.
SB 97 amends the Financial Code provisions governing digital financial assets, including licensing thresholds, exemptions, annual reporting, business-change notifications, consumer disclosures, covered-exchange certification rules, and stablecoin approval standards. It narrows some regulated categories, expands certain exemptions, and updates compliance obligations for licensees and covered persons. The bill also affects the Department of Financial Protection and Innovation’s oversight authority by refining what must be reported, what must be disclosed, and what factors must be considered before approving a stablecoin. Because it was enacted as an urgency measure, it became effective immediately and directly changed the legal framework for digital asset businesses operating in California.
The available voting history shows overwhelming support for SB 97 at every recorded stage, with unanimous or near-unanimous committee and floor votes and no recorded opposition in the provided materials. That pattern indicates the bill was viewed as a broadly acceptable regulatory update rather than a partisan or highly divisive measure. The absence of committee transcript excerpts limits direct insight into debate, but the vote record suggests consensus around updating California’s digital asset rules.
The likely areas of contention were technical and industry-focused rather than ideological. The bill tightens stablecoin review criteria, adds reporting and disclosure obligations, and requires more detailed order-execution information, which could concern digital asset firms worried about compliance costs and operational burdens. At the same time, it creates exemptions and carve-outs for rewards programs, in-game value, and certain security-sensitive policies, which may have been important to fintech, gaming, and merchant stakeholders seeking narrower regulation. The bill’s adjustments to notice requirements and the New York conditional-license pathway also suggest a balancing act between consumer protection, market access, and regulatory efficiency.