Crypto Regulation Bill Approved By California Assembly

The Digital Financial Assets Crypto Regulation Law has been criticized by people in the industry because it is like New York’s BitLicense.
Crypto Regulation Bill Approved By California Assembly
Crypto Regulation Bill Approved By California Assembly

California Gov. Gavin Newsom is going to sign a bill that would require digital asset exchanges and other crypto companies to get a license to do business in the state. The bill was just passed by the legislature.

The Digital Financial Assets Law, also called California’s “BitLicense,” is similar to the BitLicense rules that went into effect in New York in 2015. If Newsom, a Democrat, signs the law, it will go into effect in January 2025.

“The novelty of cryptocurrency is part of what makes investing in it exciting, but it also makes it riskier for consumers because cryptocurrency businesses are not well regulated and don’t have to follow many of the same rules as everyone else,” said the bill’s sponsor, Assembly Member Timothy Grayson (D-Concord).

One of the requirements is that California-licensed businesses can’t deal with stablecoins unless they are issued by a bank. This rule would go into effect in 2028. This is like a bill that was proposed in the U.S. Congress but was never passed. It would have required stablecoin issuers to have a bank charter.

In the section of the bill that talks about stablecoins, there is another clause that says stablecoin issuers that hold securities as a reserve must have “not less than the total amount of all of its outstanding stablecoins issued or sold in the United States.” The bill also says that the total market value must be calculated using the generally accepted accounting principles in the US.

The Blockchain Association, a trade group for the industry, said in a tweet that the bill would “create short-sighted and unhelpful restrictions that would make it harder for crypto innovators to work and drive many of them out of the state.”

This is the second time California has tried to set up a system called “BitLicense.” The first one, in 2015, didn’t work and was put on hold because a state senator was against it.

In California’s assembly, 71 people voted for the bill and no one voted against it. Nine people in the assembly chose not to vote. On the Senate floor, 31 senators voted for the bill and 6 senators voted against it. All of the senators who voted against it were Republicans.

Newsom has until September 30 to either sign the bill or reject it.