The bill, titled 'Digital Financial Assets Law' would, "on and after January 1, 2025, prohibit a person from engaging in digital financial asset business activity, or holding itself out as being able to engage in digital financial asset business activity, with or on behalf of a resident unless any of certain criteria are met, including the person is licensed with the Department of Financial Protection and Innovation."

The bill defines 'digital financial asset' to mean a "digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender, except as specified."

The bill includes a number of consumer and investor protections, such as requirements around customer service and disclosures, and a requirement that the licensee acts in the best interest of a customer when it recommends a cryptocurrency.

The executive order aims to create a "transparent regulatory and business environment for web3 companies which harmonizes federal and California approaches, balances the benefits and risks to consumers, and incorporates California values such as equity, inclusivity, and environmental protection". 

According to the press release, California will begin the process of creating a regulatory approach to "spur responsible innovation while protecting California consumers, assess how to deploy blockchain technology for state and public institutions, and build research and workforce development pathways to prepare Californians for success in this industry". 

Under the executive order, the state has seven priorities:

• Create a transparent and consistent business environment for companies operating in blockchain, including cryptoassets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values such as equity, inclusivity, and environmental protection.
• Collect feedback from a broad range of stakeholders, create a regulatory approach to cryptoassets harmonized between federal and state authorities, explore and establish public-serving use cases (such as incorporating blockchain technologies into state operations), and build research and workforce pipelines.
• Collect feedback from a broad range of stakeholders for potential blockchain applications and ventures, with particular attention to cryptoassets and related financial technologies.
• Engagement should include technical experts, stakeholders interested in addressing inequities and environmental impact, companies both based in and outside California, and more.
• Engage in a public process and exercise statutory authority to develop a comprehensive regulatory approach to cryptoassets harmonized with the direction of federal regulations and guidance, creating consumer protections and solidifying California’s status as the premiere global location for responsible cryptoasset companies to start and grow.
• Engage in and encourage regulatory clarity via progress on the processes outlined in the federal executive order, with state agencies coordinating closely with the Washington, D.C. Office of the California Governor.
• Explore opportunities to deploy blockchain technologies to address public-serving and emerging needs, working with the private sector, academia, and community to present pilots for innovative policies, programs, and solutions that demonstrate and showcase the potential of adopting blockchain technologies to respond to specific challenges identified by state agencies.
• Identify opportunities to create a research and workforce environment to power innovation in blockchain technology, including cryptoassets. The goals will be to expose students to emerging opportunities, power emerging industries, and help ensure economic benefits are experienced equitably.