Key Takeaways:
- Assembly Bill 2269, a bill to regulate cryptocurrency, is vetoed by California Governor Gavin Newsom.
- The purpose of the measure was to require the California Department of Financial Protection and Innovation to issue special licenses to cryptocurrency firms and exchanges.
The crypto oversight law, Assembly Bill 2269, was vetoed by California Governor Gavin Newsom. The bill called for the California Department of Financial Protection and Innovation to issue a special license to cryptocurrency businesses and exchanges.
The law was approved by the state senate and the assembly (71-0). Newsom, who had until September 30 to decide, vetoed the legislation.
Assembly Bill 2269, sponsored by Tim Grayson (D), would have established a licensing system for anyone wishing to assist cryptocurrency transactions, similar to how money transfers are now regulated by the Money Transmission Act.
The bill is comparable to the statute in New York that requires cryptocurrency businesses to obtain a “BitLicense” for services using virtual assets.
Eric Adams, the current mayor of New York, has criticized this clause for preventing the city from becoming a center for virtual assets.
The Digital Financial Assets Bill sought to increase the regulation of cryptocurrency businesses operating in California.
In a statement defending his veto, Newsom stated, “On May 4, 2022, I issued Executive Order N-9-22 to position California as the first state to establish a transparent regulatory structure that both nurtures responsible innovation and serves as a warning who use digital asset financial services and products – all within the context of a rapidly evolving federal regulatory picture.”
“Over the past few months, my Administration has engaged in substantial outreach and study to seek feedback on strategies that balance consumer advantages and risks, comply with federal regulations, and take into account California values like equity, inclusiveness, and environmental protection.“
Additionally, Newsom highlights the cost-benefit analysis of the suggested legislation. He claims that this legislation will cause California’s general budget to borrow tens of millions of dollars. He thinks that such a significant sum needs to be taken into consideration while creating the budget.
The governor also mentions the forthcoming midterm elections for federal office. He thinks that a more adaptable strategy is required to encourage a balance between innovation and protection.
Grayson noted in a tweet that the Assembly had “overwhelmingly” voted in support of the bill, which earned 71 yes votes, 0 no votes, and 9 abstentions, and that he would “continue to work to defend California’s consumers.”
In the worst-case scenario, the Bitcoin market is “deliberately skewed” against regular consumers, he claimed. If there are no safeguards in place to shield customers from fraud and dishonest business practices, a financial market cannot be deemed healthy.
