California Opposes SEC Crypto Plan Over Investor Protection Risks

California is challenging an SEC crypto proposal that state officials warn could weaken investor protections by limiting their review of offerings. The dispute centers on federal fundraising exemptions and states’ ability to screen investments before sales. Investors could lose a layer of protection against risky crypto offerings under a federal proposal, California’s financial regulator warned on Oct. 21. The Department of Financial Protection and Innovation (DFPI) outlined its opposition to Regulation Crypto Assets after submitting a comment letter to the U.S. Securities and Exchange Commission (SEC). Federal securities law preserves states’ authority to investigate fraud, deceit, and unlawful broker or dealer conduct. California’s objection focuses on losing preventive screening tools through federal limits on state registration and qualification requirements.

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