Gov. Gavin Newsom has refused to sign legislation that would have established licenses and permits and a regulatory framework for cryptocurrency companies in the state, citing the need for a more flexible technique to "keep up with rapidly changing technology and use cases" for digital assets.
"Digital assets have become incredibly common in our financial ecosystem, with more users purchasing and selling cryptocurrencies each year," Newsom wrote to the state Assembly in a letter. "It is premature to enshrine a licensing structure in law without taking into account... upcoming federal actions."
The governor's opposition to the Assembly bill emerges as the federal government considers stricter crypto regulation. According to Bloomberg, the House could vote on legislation to outlaw stablecoins as soon as this week. Meanwhile, earlier this month, SEC Chairman Gary Gensler hinted that proof-of-stake (PoS) cryptocurrencies might be regulated as securities.
AB 2269, dubbed "Digital financial asset businesses: regulation," was presented by a California Assembly member previously this year and passed in the Assembly and California State Legislature at the end of August.
Many industry representatives were outspokenly opposed to the bill. The Blockchain Association said in a statement that the bill's licensing and reporting requirements would stifle local growth and drive the industry out of California.
The governor went on to say that the veto resulted from his administration's extensive research and outreach on cryptocurrency. "A more adaptable approach is required to ensure that regulatory oversight can maintain rapidly changing technologies and use cases while also being tailored with the appropriate tools to deal with trends and mitigate consumer harm."
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