California crypto licensing bill approved by legislators
Would require crypto businesses to get licensed
California Governor Gavin Newsom is set to sign a recently passed bill that would require cryptocurrency-related businesses to obtain a license to operate in the state.
California Assembly member Timothy Grayson introduced the Digital Financial Assets Law (AB 2269) with support from the Consumer Federation of California, which will establish the law.
The California Senate approved AB 2269 on Monday, with 71 yes votes and zero no votes. Nine members of the assembly abstained from voting.
The aim of the proposed law, according to a statement from Grayson, is to protect Californians from "financial hardship and foster responsible innovation by licensing and regulating the activities of cryptocurrency exchanges," adding that the bill would require licensees to "act in the best interest of a customer when it recommends a cryptocurrency."
The requirements also include a prohibition on California-licensed stablecoin issuers unless that stablecoin is issued by a bank or is licensed by the California Department of Financial Protection and Innovation.
In addition, stablecoin issuers that hold securities as a reverse would be required to own an amount "not less than the aggregate amount of all of its outstanding stablecoins issued or sold in the United States."
Not everyone is a fan of the bill. The Blockchain Association tweeted the bill would only prevent innovation by creating shortsighted and unhelpful restrictions inconsistent with the governor's vision for crypto policy in California:
"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."
The bill now heads to Newsom’s desk to be signed into law. The governor has until September 30th to sign or veto the bill, which would go into effect January 2025.
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