Department of Financial Protection and Innovation: state payments.

Assembly Member Valencia's proposal to modernize California's financial infrastructure would enable state agencies to accept digital financial assets as payment under the Digital Financial Assets Law (DFAL). The Department of Financial Protection and Innovation would develop regulations governing how digital assets can be used to fulfill payment obligations currently limited to traditional currency.

The legislation directs the Department to evaluate the integration of digital assets into state payment systems through a comprehensive report due by January 2027. This report must detail the volume and value of processed cryptocurrency transactions, document technical and regulatory challenges encountered during implementation, and recommend potential expansion of digital asset payments to other state agencies and regulatory frameworks.

The measure builds upon California's existing oversight of digital financial assets while maintaining current licensing requirements for businesses engaging in digital asset activities. Though the bill requires no direct state funding, implementation would necessitate updates to payment processing systems and coordination across agencies to standardize digital transaction procedures.