Assembly Member Chen's proposal to cap digital financial asset business license application fees at $5,000 modifies California's existing regulatory framework for cryptocurrency and digital asset companies. The measure amends the Digital Financial Assets Law, which requires businesses engaging in digital asset activities to obtain licensing from the Department of Financial Protection and Innovation (DFPI) by July 2026.

The bill maintains the comprehensive application requirements that prospective licensees must meet, including detailed business plans, criminal history disclosures, financial statements, and operational documentation. However, it constrains DFPI's current authority to set application fees based on review costs by establishing a fixed maximum amount. The department retains the ability to charge applicants for additional investigation expenses beyond the initial application review.

This change affects entities planning to conduct digital financial asset business activities in California, including cryptocurrency exchanges, digital wallet providers, and other virtual currency services. The existing law's core provisions remain in place, requiring companies to demonstrate sound financial condition, business competence, and compliance capabilities through the application process while ensuring submitted information remains protected under state confidentiality rules.