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.
California Governor Newsom vetoed the “premature” crypto bill which sought to create a regulatory and licensing framework.
Glad to see the Governor understands that not all regulation is appropriate or timely. We need clarity and a framework, but at a federal level. pic.twitter.com/0QwO3P2x72
— @accounting (@accounting) September 26, 2022
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.
The cryptocurrency market is under-regulated at best and deliberately rigged against everyday consumers at worst. A financial market cannot be considered healthy if there are no guardrails in place to protect consumers from scams & bad actors. My statement on the veto of AB 2269: pic.twitter.com/etEDRq2I4g
— Tim Grayson (@AsmGrayson) September 24, 2022
Grayson tweeted after the measure passed by an overwhelming majority that 71 Assembly members voted yes, 0 voted no, and 9 abstained.