- California governor, Gavin Newsom vetoed a crypto licensing and regulations bill on Friday.
- The bill will create a licensing regime for those looking to streamline crypto transactions.
- If the bill transforms into a law, stablecoins will be issued by banks or the state Department of Financial Protection and Innovation.
California governor Gavin Newsom passed a crypto licensing and regulations bill similar to New York’s “BitLicense” on Friday. The bill, called Assembly Bill 2269 is supported by Assemblymember Tim Grayson. Currently, all crypto transactions fall under the Money Transmission Act, however, this bill will change that by creating a licensing regime for crypto transaction providers.
Newsom, who signed this bill amongst 21 other bills addressing issues like cyber security infrastructure crises, stated,
On May 4, 2022, I issued Executive Order N-9-22 to position California as the first state to establish a transparent regulatory environment that both fosters responsible innovation and protects consumers who use digital asset financial services and products – all within the context of a rapidly evolving federal regulatory picture.
In a message explaining his decision to veto the bill, Newsom further shared that his administration has been running research and gathering information to find an approach that balances the benefits and risks to users, aligns with federal laws, as well as, and implements state values of equity and environmental protection.
In addition, if the bill gets signed into law, licensed entities based in California would be forced to only interact with stablecoins authorised by banks or authorized by the California Department of Financial Protection and Innovation.
Moreover, as a law, Assembly Bill 2269 will compel stablecoin issuers to depend fully on reserves, and establish a licensing and examination system for crypto companies.
However, the million-dollar loan that would be necessary to set up the said regime is not part of California’s annual budget process. Newsom is currently collaboratively working with the Legislature to deliver regulatory clarity for digital financial assets.
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