California Governor Vetoes Crypto Licensing and Regulation Bill

California Governor Vetoes Crypto Licensing and Regulation Bill

California Governor Gavin Newsom has vetoed Assembly Bill 2269, a crypto licensing and regulation bill that sought to create a framework for digital asset transactions in the state. The bill, supported by Assemblymember Tim Grayson, would have established a licensing regime for crypto transaction providers, similar to New York’s "BitLicense." Currently, crypto transactions in California fall under the Money Transmission Act, but this bill would have changed that by introducing specific regulations for the industry.

Key Provisions of the Bill

If signed into law, Assembly Bill 2269 would have required stablecoins to be issued only by banks or the California Department of Financial Protection and Innovation. Additionally, it would have mandated that stablecoin issuers rely entirely on reserves and established a licensing and examination system for crypto companies. The bill also aimed to provide regulatory clarity for digital financial assets in California.

Reasons for the Veto

Governor Newsom vetoed the bill, citing concerns about the lack of funding for the proposed regulatory regime. The bill would have required a significant investment to establish the necessary infrastructure, which was not included in California’s annual budget. Newsom emphasized the need for a balanced approach that aligns with federal laws and reflects the state’s values of equity and environmental protection.

Future of Crypto Regulation in California

Newsom has expressed his commitment to fostering responsible innovation and protecting consumers in the digital asset space. He mentioned that his administration is working with the Legislature to deliver regulatory clarity for digital financial assets. The veto highlights the challenges of creating a regulatory framework that addresses both the benefits and risks of cryptocurrency while aligning with broader federal and state priorities.

This decision underscores the ongoing debate over how to regulate the rapidly evolving cryptocurrency industry, both in California and across the United States.