California Governor Gavin Newsom vetoed legislation to regulate cryptocurrency in the state. He stressed that “a more flexible approach is needed” to “keep up with rapidly evolving technology and use cases” in the crypto sector.
Governor Newsom approves bill to regulate crypto in California
Gavin Newsom the governor of California, USA, vetoed a range of bills, including Assembly Bill 269 (AB 2269), which creates a regulatory and licensing environment for cryptocurrency.
Assembly Bill 2269, titled “Digital financial asset businesses: regulation,” was introduced earlier this year by California Assembly Member Timothy Grayson. The bill passed both the California State Senate and California State Assembly on August 29.
“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:
The popularity of digital assets is increasing in the financial sector. Every year more individuals buy and sell cryptocurrencies.
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 advocates from the industry opposed the bill. Blockchain Association is one 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:
For regulatory oversight to be able to respond to rapidly changing technology and new use cases effectively, it is necessary to have a more flexible approach that is tailored to consumer needs and address emerging trends.
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.”
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