California Officially Launches State-Level Crypto License Regime, Mandates Businesses to Achieve DFAL Compliance by July 2026

On February 18, California’s Department of Financial Protection and Innovation (DFPI) released an update on implementing the Digital Financial Asset Law (DFAL), explicitly requiring all individuals or companies offering cryptocurrency-related services to California residents to either hold a DFAL license, submit an application, or meet exemption criteria by July 1, 2026—failing which they face enforcement action. Signed into law by Governor Gavin Newsom in October 2023, DFAL establishes a statewide licensing and regulatory framework for cryptocurrencies, covering various digital asset services and crypto ATM operations. It has been widely compared to New York’s 2015 BitLicense regime. License applications will open March 9, 2026, via the Nationwide Multistate Licensing System (NMLS). Regulators advise businesses to review the pre-application checklist in advance and join the industry training session scheduled for March 23. California is home to roughly a quarter of all blockchain companies in the U.S. Joe Ciccolo, executive director of the California Blockchain Advisory Committee (CBAC), noted that as the world’s fourth-largest economy, California’s regulatory path could push for a unified national compliance standard. “Clear, predictable rules help attract serious operators and institutional capital,” he said, but warned that overly aggressive enforcement or measures out of touch with industry realities may lead some firms to exit the California market or shift focus overseas.