California Lawmakers Pass Crypto Regulation Bill
- Regulators in California are concerned about the level of volatility in crypto prices.
- California was researched as the state with the highest interest in Bitcoin, Ethereum, and other digital assets.
California’s governor, Gavin Newsom, is set to sign a new bill passed by the State Assembly requiring crypto service providers and digital asset exchanges to register with local authorities and obtain a license before offering their services.
The Digital Financial Assets Law, also known as AB 2269, has long been deliberated amongst lawmakers and, if signed into law, would be one of the boldest moves made by an American state to regulate the crypto industry.
Referred to as California’s “BitLicense,” the Digital Financial Assets Law takes after New York’s BitLicense regulation, which was effective in 2015. If signed by California’s Democrat governor, the law would take effect in January 2025. The bill requires digital asset providers to register with California’s Financial Protection and Innovation Department. Firms that fail to comply will receive a daily fine of up to $100,000 until they comply.
The bill was mostly backed by Assemblyman Timothy Grayson, who said the excitement around cryptocurrencies was understandable. According to the lawmaker, the crypto market gave consumers a sense of empowerment and freedom in making financial investments of their choice, but such freedom has to be secured. He said at the time,
While the newness of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not adequately regulated and do not have to follow many of the same rules that apply to everyone else.
Speaking on the importance of the new bill, Timothy said,
This bill will provide consumers basic but necessary protections and will promote a healthy cryptocurrency market by making it safer for everyone.
This is California’s second effort to establish a “BitLicense” framework. The initial attempt, made in 2015, was unsuccessful and put on hold due to objections from a state lawmaker.
California is one of the many US states pushing for full regulation of the crypto industry. According to Coingecko, the state ranks as the most interested in Bitcoin (BTC) and Ether (ETH) based on internet search data.
California regulators have closely monitored the cryptocurrency market for several months, and many expressed concerns over the crash of top service providers such as Terra, 3AC, and Voyager. Regulators have previously warned residents of the state about investing in the crypto market, which they deem to be risky.
The Money Transmission Act is the current regulatory structure in California. This act bans the operation of a payment processing firm without a proper license from the Commissioner of Financial Protection and Innovation.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
