Key Takeaways:
- Governor Gavin Newsom of California signed AB 2409 to prevent the issuance of certain memecoins by the state and local public officials.
- Additionally, the law restricts digital asset companies from issuing covered “official” linked tokens to residents of California, and regulates tokens that are issued starting January 1, 2027.
- Newsom signed SB 1208, which broadened California’s legal definition of crypto-based money laundering, asset seizure and victim restitutions.
Governor Gavin Newsom signed a set of new legislation on September 27, implementing increased oversight over political memecoins and crypto crime, for the Golden State. The measures centre on the regulation of officials, digital asset intermediaries, and crimes related to digital assets.
California Targets Public Official Memecoins
Adds new restrictions on memecoins connected to public officials. California officials will not be able to create memecoins, and companies will be limited in their ability to create certain tokens featuring a public official’s likeness or released as part of a public official.
The bill was authored by Assembly member Avelino Valencia and imposes crypto-specific restrictions on California public employee ethics restrictions.
The measure applies to covered tokens issued on or after January 1, 2027, according to reporting on the bill.
Enforcement Extends Beyond Token Issuers
Rules must not be applied to officials behind a token. Further, digital asset service providers (DASP) may be prohibited from entering into business with California residents if they provide covered memecoins. Enforcement also can be by state or local legal authorities via civil action, and regulators have a mechanism to take action against violations in addition to ethics rules.
The policy is responding to the increasing focus of the regulatory authorities on tokens the value of which mostly relies on the identity, branding or public profile of a politician.
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Newsom Links New Rules to Trump’s Memecoin
Newsom’s office telegraphed the desire to link the bill to the memecoin launch by President Donald Trump in 2025 as an illustration of the risks of the financial and conflict-of-interest issues the law is meant to counter.
The governor’s office says between 980,010 and 1 million people saw their investment lost and lost individually more than $3 billion while Trump made about $636 million. The figures were reported by the California administration, but are not as actual as those determined by the new legislation.
California Expands Crypto Crime Enforcement
Newsom also signed Senate Bill 1208, another bill in the package related to digital assets.
The governor’s office explains SB 1208 aims to prevent cryptocurrency money laundering, and establishes more streamlined recovery procedures for crypto currencies linked to criminal activity. The measure will also help protect victims of crypto fraud and offer a legal means of seizing cryptocurrency used in transnational criminal financial operations.
AB 2409 and SB 1208 are complementing one another and advancing the crypto policy agenda in two ways: limiting engagement in politically connected memecoins and enforcing against illegal digital asset activity.
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