California Governor Gavin Newsom has vetoed a bill to regulate crypto in his state. He stressed that “a more flexible approach is needed” to “keep up with rapidly evolving technology and use cases” in the crypto sector.
Bill to Regulate Crypto in California Vetoed by Governor Newsom
The governor of the U.S. state of California, Gavin Newsom, vetoed a number of bills Friday, including Assembly Bill 2269 (AB 2269) which will establish a licensing and regulatory framework for cryptocurrency.
Assembly Bill 2269, titled “Digital financial asset businesses: regulation,” was introduced earlier this year by California Assembly Member Timothy Grayson. It passed the California State Senate on Aug. 29 and the California State Assembly the next day.
“AB 2269 would establish a licensing and regulatory framework, administered by the Department of Financial Protection and Innovation, for digital financial asset activity,” the governor detailed, adding:
Digital assets are becoming increasingly popular in our financial ecosystem, with more consumers buying and selling cryptocurrencies each year.
He then referenced the executive order he issued on May 4 to create “a transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values, such as equity, inclusivity, and environmental protection.”
The governor explained that since the issuance of the executive order, his administration has conducted “extensive research and outreach” and has come to the conclusion that “It is premature to lock a licensing structure in statute without considering … forthcoming federal actions.”
Some industry advocates opposed the bill. Blockchain Association, for example, said the bill “creates shortsighted and unhelpful restrictions that would impede crypto innovators’ ability to operate and push many out of the state.” The organization noted that “The bill’s licensing provisions are designed to install the same type of onerous licensing and reporting regime that has stunted the growth of the crypto industry and limited access to safe and reliable crypto products and services in New York.”
Governor Newsom emphasized:
A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.
Furthermore, the California governor pointed out that the bill “would require a loan from the general fund in the tens of millions of dollars for the first several years,” stressing that “Such a significant commitment of general fund resources should be considered and accounted for in the annual budget process.”