Department of Financial Protection and Innovation: state payments.

Assembly Member Valencia's legislation authorizes the Department of Financial Protection and Innovation to accept stablecoins as payment for certain fees required under California's Digital Financial Assets Law. The department must develop regulations, in consultation with the State Treasurer and Controller, allowing licensees and applicants to make payments using stablecoins that are issued by licensed entities and directly redeemable from the issuer.

The measure establishes specific limitations on stablecoin payments, excluding their use for enforcement-related fees or in cases where such payments would conflict with existing state financial requirements. The department must track implementation metrics and submit a report to the Legislature by January 1, 2029, detailing the volume and value of stablecoin transactions along with any technical or regulatory challenges encountered. Additionally, the Treasurer and Controller must provide recommendations by January 1, 2028, regarding potential expansion of stablecoin payments to other state agencies and programs.

The provisions take effect July 1, 2027, and include a sunset date of January 1, 2032. Implementation costs will be recovered through existing fee mechanisms specified in the Financial Code. The measure requires no state appropriation and maintains all current enforcement authorities while adding this payment option.