California Governor Gavin Newsom vetoes Assembly Bill 2269 – a crypto oversight bill. The bill would have required crypto businesses and exchanges to acquire a special license from the California Department of Financial Protection and Innovation. The bill passed both the assembly(with a 71-0 vote) and the state senate. However, Newsom, who had until 30th September to make a decision, vetoed the bill.
The bill is similar to the law in New York which asks crypto companies to acquire a “BitLicense” for virtual asset services. Current New York mayor Eric Adams has criticized this provision, preventing New York from becoming a virtual assets hub.
The bill, called the Digital Financial Assets Bill, aimed to create more oversight over crypto companies in California.
Why Newsom Vetoed The Crypto Oversight Bill
In a letter to the California State Assembly, Newsom informed the legislative body that he will veto the crypto oversight bill. Newsom highlighted the increasing popularity of cryptocurrencies and reaffirmed the need for transparent regulation that can protect Californians.
Newsom revealed that his administration has conducted extensive research on approaches that can protect citizens from the risk of cryptocurrencies. However, Newsom believes that it is early to lock a licensing structure into a statute without considering his research. Moreover, the governor points to the upcoming federal mid-term election. He believes that a more flexible approach is needed that can foster a balance between protection and innovation.
Newsom also points out the cost-benefit analysis of the proposed bill. According to him, this bill will draw a loan worth tens of millions from California’s general fund. He believes that such a significant amount needs to be accounted for during the budget process.
Newsom Receives Praise From Crypto Community
The crypto community is praising this decision by the California governor. Jake Chervinsky of Blockchain Association praises Newsom for his strength and his guts to stand up to the assembly. Similarly, Miles Jennings of the crypto firm a16z praises him for giving the Web3 industry a great opportunity in California.