Calif. Governor Newsom Vetoes Crypto License Bill

California Governor Gavin Newsom vetoed a bill on Friday (September 23) that would have required crypto-financial services to have a special license to operate.

Newsom said the Digital Financial Assets Act, which passed the state Assembly and Senate last month, would be “premature and costly.”

While Newsom said he agrees with the bill’s intent to protect people from financial harm and establish clearer regulations, he said his administration has been researching how to approach things in what he considers the right way.

“It is premature to lock a licensing structure into statute without considering both this work and upcoming federal actions,” Newsom said in a statement. “A more flexible approach is needed to ensure that regulatory oversight can keep pace with rapidly evolving technology and use cases, and is tailored with the right tools to address trends and reduce consumer harm.”

He also said the bill would have to borrow “tens of millions” of dollars from the general fund in its first few years. It would be “significant” and would need more work to fit with the state’s annual budget process.

The bill has seen opposition from some in the industry, including the Blockchain Association, which said the legislation would see “short-term and unhelpful restrictions that would hinder crypto innovators’ ability to operate and push many out of state.”

Crypto regulation is changing across the country, with the Department of Justice looking to change how it deals with crypto criminals.

Read more: The Department of Justice is seeking the green light from Congress for faster crypto investigations

In the DOJ’s recently released crypto-regulatory advisory report titled “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” the department had a number of recommendations for how to deal with criminals.

For example, there was a proposal to double the maximum prison sentence for unlicensed money transferring offences, increasing the term from five to 10 years. There was also a recommendation to change legal guidelines to ensure longer sentences.

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