California’s latest crypto regulation updates have raised eyebrows across the Pacific Palisades’ business network. There is suddenly genuine uncertainty related to the changes for service providers and local shop owners who started accepting crypto payments.
The new law aims to target crypto-based companies that try to operate like traditional financial providers, including wallet providers, exchanges, and custodians. They must now apply for licenses through California’s Department of Financial Protection and Innovation (DFPI). The changes seem simple enough. However, there are scenarios where the new laws could bite small businesses and online service providers.
Local stores and online entertainment venues have genuinely started seeing the benefits of accepting crypto payments. Industry expert Wilna van Wyk explains how crypto payment integration has allowed locals to access better fairness and faster withdrawals across thousands of games from leading online casinos. For example, several international online casinos embraced cryptocurrencies to streamline payouts, reduce overheads, and appeal to a global player base. This resulted in local and international players benefiting from enhanced privacy and security. Besides online gambling platforms, several online sites accepting crypto have reshaped entertainment, delivering convenience and accessibility to consumers.
The benefits may vanish quickly if store owners partner with the wrong provider. For example, a local store using a third-party provider or wallet to accept crypto payments may be penalized for the association because the provider didn’t abide by the new laws. The updated regulations may backfire for some store owners and online operators.
Any business accepting crypto payments must rethink how they manage and report transactions since the California Legislature approved the AB 39 Digital Financial Asset Businesses law that began in January 2025. Ethereum, Bitcoin, and other stablecoins remain legal tender, but accepting them as a business owner while ensuring compliance has become a lot more complicated.
The law is new and has given small businesses very little time to adapt. Large companies have legal teams providing guidance, but smaller retailers and professionals depend on the platforms that currently have very little support and guidance. These professionals must interpret the law through vague updates and some technical documents by themselves.
The DFPI has not focused on clarifying the compliance expectations for smaller companies, which makes the businesses react cautiously and potentially remove the payment options that appeal to a large portion of Californians. Some are even geoblocking Californians because they’re afraid of overstepping the boundaries until they confirm their licenses. Access to crypto infrastructure is also declining for local businesses because of the new laws.
The impact could be more disruptive for other local professionals like contractors, realtors, and consultants. Californians have stopped wondering who accepts Bitcoin payments because over 400 local businesses have integrated crypto payment systems, including restaurants, auto repair shops, and nail salons. Many small business owners and sole proprietors started accepting crypto to meet the demands of our tech-savvy community. However, accepting payments this way may spark scrutiny if the underlying platforms aren’t following the new laws.
The AB 39 law also requires businesses licensed to accept crypto payments to keep detailed records for up to five years. The law doesn’t consider what happens to a small store owner in the Palisades when the provider leaves the region and the records disappear. The store owner will face incredible challenges during tax season in the case of an audit.
Crypto started appealing more to small businesses in the Palisades and greater California because it offered flexibility with lower transaction fees while attracting tech-savvy Californian customers. Credit card providers take between 2% and 4% from each sale, costing small business owners a fortune. The new laws may reintroduce the bureaucracy and higher transaction costs that many small businesses tried to avoid.
The most tech-savvy US cities include San Jose, California. The home of Silicon Valley isn’t alone. Venice and Santa Monica are also thriving digital hubs, but companies in these regions will stop experimenting with crypto payments because of the tighter regulations. Small companies in the Pacific Palisades may not even bother because staying compliant may be more challenging than asking for traditional payments from customers.
Businesses across California integrated crypto payments to serve a growing customer base, not to be speculative. Customers often inquire whether businesses accept crypto. Businesses answered by integrating the payment systems.
Unfortunately, those same companies now face complicated compliance guidelines through association with unlicensed providers, even those with white-label affiliations. All businesses must consider any partner that now issues tokens or offers exchanges because they are responsible for meeting the new laws.
One innovative way the new laws may have positive benefits is that they could encourage local FinTech companies to develop and provide services. It may also encourage tech-savvy locals to build automated compliance models using AI. These options aren’t guaranteed, and many small businesses will drop crypto payments before knowing about these alternatives.
California made some advances this year, such as the move to protect Bitcoin rights for residents. The Assembly Bill 1052 protects self-custody for Bitcoin owners in the state, which shows a positive move in the right direction. However, the new laws attack local businesses, removing the right of Bitcoin owners to have greater access to more crypto payment businesses in their towns and cities. The two bills seem to contradict each other.
The state does aim to improve consumer protection, prevent fraud, and hold large-scale operators accountable. Still, the individual crypto owner suffers, and so do the small businesses who don’t have legal teams on the payroll.
