California Senate passes bill to ban memecoin issuance by public officials

California lawmakers passed a bill restricting public officials’ involvement with memecoins, citing concerns around conflicts of interest and “pay-to-play arrangements.”

The California Senate passed Assembly Bill 2409 in a 40-0 vote on Wednesday, according to Legiscan data. The Assembly subsequently voted 78-0 to concur in the Senate’s amendments. The bill entered the enrolled stage and awaits the governor’s signature.

The bill would prohibit digital asset service providers from offering California residents memecoins issued on or after Jan. 1, 2027, that are offered by or in partnership with federal public officials or state or local public officers. The bill defines memecoins as digital assets whose value is derived primarily from public interest, speculation or community engagement.

Investors in the US president-linked Official Trump (TRUMP) memecoin are an estimated $3.2 billion underwater, with most of those losses unrealized, according to a Thursday report from nonprofit consumer advocacy organization Public Citizen.

The TRUMP token ranks as the fifth-largest memecoin with a $688 million market capitalization. The token rose 53% during the past week, recouping some of the losses from its 67% decline over the past year, according to CoinMarketCap.

The Trump family’s crypto ventures have also raised obstacles to passing the US crypto market structure bill known as the Digital Asset Market Clarity (CLARITY) Act. 

A bipartisan ethics addendum, which has not been made public, would reportedly allow Trump to defer capital gains taxes on any required divestitures, potentially leading to tax savings in the millions.

Related: Most Americans say the Trump family’s crypto investments are not ‘appropriate’: Poll