California financial regulators oppose SEC cryptocurrency plan: warn it may undermine investor protection

The California Department of Financial Protection and Innovation (DFPI) has submitted a letter to the U.S. Securities and Exchange Commission (SEC) opposing its "Regulation Crypto Assets" proposal, stating that the plan could undermine investor protection and limit state governments' oversight of issuance projects. DFPI Commissioner KC Mohseni stated that California opposes federal regulators weakening state regulatory authority and protective measures.

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 issuances must disclose project details, risks, and other information necessary for investor assessment, and some financing must also submit financial statements and ongoing reports. 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 adjustment proposal; DFPI stated that its fraud tracking list has added nearly 200 cryptocurrency-related scams, a 30% increase from the previous year.