California Financial Regulator Opposes SEC Cryptocurrency Proposal

The California Department of Financial Protection and Innovation (DFPI) has submitted a comment letter to the U.S. Securities and Exchange Commission (SEC), opposing its "Regulation Crypto Assets" proposal, stating that the plan could weaken investor protection and limit state oversight of issuance projects. DFPI Commissioner KC Mohseni expressed California's opposition to federal regulators undermining state regulatory authority and protections. The proposal aims to allow eligible issuers to raise up to $5 million over four years through a startup exemption; another cryptocurrency financing exemption allows issuers to raise up to $75 million within 12 months. Relevant issuers must disclose project details, risks, and other information necessary for investor assessment, with some financing also requiring financial statements and ongoing reporting. Federal securities laws still retain the authority for states to investigate securities fraud, deceptive practices, and illegal broker or dealer activities. Blockchain payment company Ripple, cryptocurrency exchange Coinbase, and exchange operator Nasdaq all support the adjustments to the proposal; DFPI noted that its fraud tracking list has added nearly 200 cryptocurrency-related scams, a 30% increase from the previous year.

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