On Friday, Gavin Newsom, the Governor of California, vetoed the state’s BitLicense bill for crypto licensing saying states need a more flexible approach toward crypto regulation.
Governor Newsom Rejects BitLicense Bill
On Friday, Governor Newsom rejected California’s BitLicense bill, similar to New York’s. Bill 2269, spearheaded by Tim Grayson, a member of the state’s assembly, aimed to regulate cryptocurrency in the state.
The bill, if signed, would have made licensing for crypto firms compulsory. All firms that wished to offer crypto services in the state would have to register for a license.
This is similar to how the Money Transmission Act oversees the transfer of money in the state. The BitLicense bill is part of eight other bills the Governor rejected.
The Governor had signed 21 bills while rejecting 8. The bills signed ranged from infrastructure concerns to cybersecurity.
Meanwhile, the Governor explained why he vetoed the bill. Newsom said he issued an Executive Order on May 4th.
The order aimed to make the state the first to prude a regulatory environment that promotes innovation while protecting the rights of digital assets investors.
Furthermore, Newsom added that his administration has carried out comprehensive research on the crypto sector. The aim is to gather the information that would help the state to balance the risks and benefits of crypto to users.
It Is Premature To Create A Crypto Licensing Law – California Governor
Also, the research is to highlight approaches that would harmonize the state’s law with federal regulations while incorporating California’s values like inclusivity, environmental protection, and equity.
Therefore, the Governor stated that it is premature to develop a crypto licensing law without considering the order’s feedback. He also noted the possibility of the country issuing regulations in the future.
Meanwhile, the state’s assembly unveiled this bill in August. Signing the bill would have affected stablecoins and crypto firms.
The bill stated that licensed firms in California must only use bank-issued stablecoins or those licensed by the Department of Financial Protection and Innovation.
Also, stablecoin users would have to be fully backed with reserves equivalent to stablecoins that are in circulation. In addition, it would create an examination and licensing climate for crypto firms.
California’s To Adopt A Flexible Approach For Crypto Regulation
However, Newson said the state needs a flexible approach to regulating the crypto sector. This would ensure that regulations stay in touch with innovative technologies and uses.
The regulation must also have the right tools to protect users and address trends. Furthermore, the Governor claimed that the licensing regime would need a million-dollar loan.
The state’s annual budget did not make any provision for such loans. Newsom reiterated his commitment to work with lawmakers to attain proper regulations once the country issues rules for digital financial assets.
He promised to ensure that California remains an attractive location for investors and innovators.