California: New Bill on Its Way to Shake Things Up

The potential bill will require the registration of the cryptocurrency service before operation.

California: New Bill on Its Way to Shake Things Up

California State Senate has passed a bill regarding Digital Financial Assets, which has been also approved by the California State Assembly. These events took place this week, and at this stage, the bill is headed to the governor of California State, Gavin Newson, who should either veto it or pass it by the end of this month.

Assembly Bill No. 2269 is going to modify the financial code of California by including digital assets under its spectrum from January 2025. Any digital financial asset business activity associate would have to obtain a proper license from the state’s Department of Financial Protection and Innovation, to legally operate within the state.

Additionally, the legislation characterizes the “digital financial asset” as a “digital representation of the value that is used as a medium of exchange, a unit of account, or a store value, and that is not a legal tender whether or not denominated in legal tender.”

The bill was introduced all the way back in February this year by the Democratic Assembly member Timothy Grayson. After approval of the bill from his own chamber, Grayson stated:

“The Legislature’s understanding that a healthy cryptocurrency market can only exist if simple guardrails are established.”

However, the advocates of the crypto industry have shared their opinion against the proposed legislation. Before the bill was passed in both houses, the Blockchain Association, a crypto lobbying group pushed on the assembly members to reject the bill. On the other hand, the group suggested that the legislators follow along with the process arranged in the executive order from Newsom, the governor of California state. Moreover, the group stated that:

“The bill creates shortsighted and unhelpful restrictions that would impede crypto innovators’ ability to operate and push many out of the state.” Blockchain Association added that: “it would also prevent most stablecoin issuers from operating in California, which it argues deprives the state of significant economic activity and countless jobs.”

As stated by the Blockchain Association, the legislation would stun the growth of the crypto industry and limit access to safe crypto services and products, of the burdensome licensing and reporting regime, as happened in New York.

The New York state businesses that provide crypto services are mandatory to apply for a BitLicense. First licenses were introduced back in 2015 and since then the local crypto community supporters, which include Mayor Eric Adams, spread their dissatisfaction with the regulations.

Additionally, this summer a new bill was passed by New York’s state upper house, which banned the Bitcoin mining permits for a period of 2 years. However, this bill had never been passed by the lower house, the Assembly. Yet, the bill is currently awaiting passage from the Governor of New York, Kathy Hochul.

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