A single stroke of the pen is the final step needed to create California one of the first states require cryptocurrency-related businesses to obtain a special license to operate in the state.
California Assembly member Timothy Grayson introduced the bill, AB 2269, with the support of the Consumer Federation of California, which would establish the Digital Financial Assets Law.
The California Senate approved AB 2269 on Monday, with the Assembly voting to approve the following day. The bill now goes before California Governor Gavin Newsom, whose signature would pass it into law.
The goal of the proposed law, Grayson says in a press release, is to protect Californians from “financial hardship and promote responsible innovation by licensing and regulating the activities of cryptocurrency exchanges,” adding that the bill would require licensees to “behave in the best possible manner “. the interest of a customer when recommending a cryptocurrency.”
“While the novelty of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not sufficiently regulated and don’t have to follow many of the same rules that apply to everyone else,” Grayson said In the newspaper. release.
“By licensing digital financial asset companies under the Department of Financial Innovation and Protection (DFPI), the industry will gain necessary regulatory clarity and consumers will have established protections,” the assemblyman’s office added.
According to Grayson, the bill would provide consumers with basic but necessary protections and promote a healthy market by making it safer for everyone.
“Fortune favors the balanced and wise, not just the so-called ‘brave,'” said Robert Herrell, executive director of the Consumer Federation of California, in a prepared statement taking a swipe at the terrifying Crypto.com Super Bowl commercial featuring Matt Damon in the main role. “Hundreds of millions in self-promotion by the crypto industry should not overshadow the need for solid consumer protections.”
Critics of the bill, including the Blockchain Association, said the bill would only stifle innovation by creating short-term, unhelpful restrictions that are inconsistent with the governor’s stated vision for crypto policy in California.
“The bill’s licensing provisions are designed to install the same type of burdensome licensing and reporting regime that has stunted the growth of the crypto industry and limited access to safe and reliable crypto products and services in New York,” the Blockchain Association tweeted.
Newsom has not signaled whether he will sign the bill. The governor has until September 30 to sign or veto the bill, which takes effect in January 2025.
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