Memecoins: California Adopts a Law Banning Their Issuance by Public Officials

California takes a new crucial step in regulating memecoins and digital assets linked to Californian elected officials. Bill AB 2409, led by Avelino Valencia, distinguishes rules applicable to public officials and digital providers. After its adoption by the Senate on August 26, the Assembly unanimously validated the amendments. The bill still has to go through final formalities before being reviewed by Governor Gavin Newsom. It notably targets the issuance of tokens by certain individuals exercising public authority in California. A targeted ban for public officials In brief The California Senate adopted AB 2409, a bill aiming to ban public officials from issuing derivative currencies. The Assembly unanimously validated the Senate’s amendments with 78 votes for and none against, before Governor Gavin Newsom’s review. The measure targets elected officials and certain public employees, particularly those holding decision-making power over contracts and calls for tender. The bill aims to prevent conflicts of interest, corruption risks, and circumvention of financial transparency rules. A targeted ban for public officials Bill AB 2409 proposes to prohibit any public official or concerned public sector employee from issuing a derivative currency. The rule targets memecoins when a public official offers a token in exchange for value. The bill considers issuance any making available of a token for purchase, gift, or exchange. This definition applies even without project promotion. The definition of public official in the text covers individuals elected or appointed at the state and local government levels. It includes members of the California Legislative Assembly, as well as members of councils, commissions, and advisory committees. Memecoins are therefore not the only element targeted, as the measure more broadly addresses derivative currencies. The provision concerning public employees adopts a narrower scope. It concerns employees of government entities holding decision-making power over calls for tenders and contracts. The bill would add these prohibitions to a new chapter of the California Government Code regarding prohibited digital financial transactions. €20 bonus for registering on BitvavoThis link uses an affiliate program. The law aims to limit conflicts of interest California lawmakers justify this restriction by citing the use of public authority. According to the text, public officials should not exploit their position to enrich themselves. The issuance or promotion of memecoins could create conflicts of interest and risks of corruption. The provision also mentions exploitation and foreign influence. Avelino Valencia had already defended this logic in April during the bill’s review by the assembly’s banking and finance committee. He explained that platforms facilitated the creation of cryptocurrencies based on memes. According to him, this ease could allow ill-intentioned individuals to circumvent existing rules. These rules concern financial transparency and conflicts of interest. In this context, memecoins become a specific case in the debate over the political use of digital assets.