California Governor Newsom Vetoes Crypto Bill

The governor said the bill would have cost California “tens of millions” of dollars and the state would wait for federal policymakers to reach their own conclusions on crypto

article-image

Gavin Newsom; Source: Shutterstock

share

key takeaways

  • California’s governor has refused to sign a digital assets bill that sought greater regulatory clarity
  • Initially decreed by the governor via executive order, the bill would have established a licensing regime similar to those overseas

California’s governor has vetoed a bill — born out of an executive order he issued in May — that sought to establish a licensing and regulatory framework for digital assets.

The bill would have tasked crypto companies with seeking a license to offer their services or digital assets to the state’s residents. 

It would have also formally adopted new rules governing stablecoins, including requirements that licensed companies only engage with bank-issued stablecoins, which must remain 100% backed by reserves.

Governor Gavin Newsom said his reasoning was due to the bill’s “premature” nature to lock in a licensing regime under Assembly Bill 2269 without first considering prior research and forthcoming federal actions.

At least four US watchdogs — the Secretary of the Treasury, the Secretary of State, the Secretary of Commerce and the Agency for International Development — as well as “other relevant agencies” participated in one of many reports on digital asset regulation in July.

The report included the usual well-worn arguments from government officials, including the need to regulate stablecoins following Terra’s collapse, as well as the potential for criminal use and financial instability resulting from the new asset class.

“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,” the governor said in a statement addressed to members of the California State Assembly.

Newsom also said that presenting a new regulatory program was a costly undertaking which, as the governor stated, would require a loan from the state’s general fund exceeding tens of millions of dollars during the bill’s initial implementation.

“Such a significant commitment of general fund resources should be considered and accounted for in the annual budget process,” the governor said.

Crypto proponents across California and the US have been asking for clearer guidelines on digital assets since at least 2015 shortly following the birth of Ethereum. Several boom and bust cycles throughout crypto’s short history have also prompted regulators to act

The governor said that while he had refused to sign the bill into law, he would work “collaboratively” with California’s legislature to achieve regulatory clarity only after federal regulators had metered out their own stance toward the new asset class.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

Revolut said that the standalone crypto exchange is currently “invite only”

article-image

The stock price jump comes after Coinbase reported ending its seven-quarter run of net losses during the fourth quarter

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders