The California Legislature has approved a bill that would license companies providing crypto-financial services in the state. The measure now goes to Governor Gavin Newsom for signing.
Press Release: Consumer Federation of California Sponsored Digital Asset/Cryptocurrency Licensing Bill Sent to Governor with Strong Bipartisan Support@AsmGrayson #AB2269 #CALeg pic.twitter.com/1J0mWio8xE
— Consumer Federation of California (@consumercal) August 30, 2022
By September 30, Newsom must either sign the bill or veto it. If approved, the measure would take effect in January 2025.
The California Digital Financial Assets Act is based on New York’s BitLicense rules introduced in 2015.
“While the novelty of cryptocurrency is part of what makes investing exciting, it also poses risks for consumers, as companies in the space are not adequately regulated and should not have to follow many of the same rules that apply to everyone else,” said the bill’s author Tim Grayson.
Among the California bill’s provisions is a ban on issuing stablecoins by issuers that are not banks or not licensed by the Department of Financial Protection and Innovation. The restriction will be phased out by 2028.
Another provision regarding stablecoins requires issuers that use securities as reserves to hold them at a level at least equal to the aggregate value of outstanding coins issued or sold in the United States.
Overall, the bill tightens regulation and oversight of the sector. New York’s BitLicense regime has repeatedly faced criticism for its stringency. Its operation has driven some crypto companies out of the state. Even the Department of Financial Services has called for relaxing the rules.
The California version faced opposition from the industry lobbying group Blockchain Association.
“The bill imposes shortsighted and unnecessary restrictions that would impede crypto innovators’ ability to operate and push many out of the state,” the group said.
2/ State Assembly Bill A.B. 2269 creates shortsighted and unhelpful restrictions that would impede crypto innovators’ ability to operate and push many out of the state.
This proposal is inconsistent with the Governor’s vision for crypto policy in California.
— Blockchain Association (@BlockchainAssn) August 29, 2022
In July, amid a market downturn, the Federal Reserve urged to tighten regulation and supervision of the crypto industry at the federal level.
Follow ForkLog’s Bitcoin news in our Telegram for cryptocurrency news, prices, and analysis.