California Governor vetoes cryptocurrency regulation bill

California Governor Gavin Newsom vetoed a bill that would license companies to provide crypto-financial services in the state.

The document imposes tighter oversight of the industry. In particular, it requires stablecoin issuers using securities as reserves to hold them at a value at least equal to the aggregate value of outstanding coins issued or sold in the United States.

The bill is based on New York State’s BitLicense rules introduced in 2015. The latter have repeatedly faced criticism and led some crypto firms to exit the state.

According to Newsom, it would be premature to establish a licensing regime without considering feedback on the document. The governor also noted the possibility of a future federal regulatory framework.

\”There is a need for a more flexible approach so that regulatory oversight can keep pace with rapidly evolving technologies […], and to use appropriate tools to account for trends and reduce harm to consumers,\” the state leader said.

He noted that implementing the document would require additional funding not provided for in the current budget.

\”I intend to work in cooperation with lawmakers to achieve proper regulatory clarity, […] and at the same time ensure that California remains a competitive place for investment and innovation,\” the governor concluded.

State Assembly member Tim Grayson reminded that the rules were backed by the California Legislature.

The cryptocurrency market is under-regulated at best and deliberately rigged against everyday consumers at worst. A financial market cannot be considered healthy if there are no guardrails in place to protect consumers from scams & bad actors. My statement on the veto of AB 2269: pic.twitter.com/etEDRq2I4g

— Tim Grayson (@AsmGrayson) September 24, 2022

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\”The cryptocurrency market is, at best, under-regulated and, at worst, deliberately tilted against ordinary consumers. A financial market cannot be considered healthy if there are no guardrails to protect customers from scams and bad actors,\” he wrote.

Earlier, on September 16, the White House presented a concept for regulating the cryptocurrency industry. It envisages a number of initiatives, including tougher enforcement practices against providers of services tied to digital assets.

Later, Bloomberg reported a draft bill to regulate ‘stablecoins’. In particular, it will impose a two-year ban on new algorithmic stablecoins such as TerraUSD.

The Coinbase chief Brian Armstrong said that the tough U.S. authorities’ approach to supervising the crypto industry is hampering its development.

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