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A Bill on Crypto Licensing Is Vetoed by the California Governor

The Crypto licensing and a regulatory bill that would have been the West Coast counterpart to the BitLicense in New York was rejected by Democratic Governor Gavin Newsom on Friday.

Business entities engaged in digital currency operations in New York State are required to obtain a BitLicense from the state’s Department of Financial Services.

Assemblyman Tim Grayson (D-Vallejo) proposed Assembly Bill 2269, requiring licensing for anyone facilitating crypto transactions, similar to the state’s Money Movement Act, which deals with money exchange. Newsom vetoed eight pedestrian crossing light bills, twenty-one cybercrime bills, and 26 infrastructure bills on Friday.

How Did the Decision Come About?

Newsom explained his veto in a message aimed at positioning the state as the first to foster responsible innovation and protect consumers who use digital assets as financial products and services. On May 20, 2022, he issued Executive Order N-9-22.

During his tenure as governor, Brown said, “My administration has conducted extensive research and outreach to find ways to balance consumer benefits with risks, harmonize with federal regulations, and incorporate California values like equity, inclusion, and environmental protection.”

Assembly members approved the bill last month. A law would have licensed and examined crypto companies, allowed California-licensed entities only to interact with stablecoins issued by banks and other entities licensed by the Department of Financial Protection and Innovation and required stablecoin issuers to maintain reserves.

In his letter, Newsom stated, “there is a need for a more flexible approach to regulatory supervision that is equipped with the right tools to address trends and reduce consumer harm.”.

According to Newsome, California has yet to include a multimillion-dollar loan in its budget to finance the new licensing and regulatory framework.

Grayson tweeted after the measure passed by an overwhelming majority that 71 Assembly members voted yes, 0 voted no, and 9 abstained.