California Governor Gavin Newsom has vetoed a statewide bill that would have established a regulatory framework to regulate cryptocurrency – and crypto supporters are excited.
On a Friday memo Newsom, describing the veto, called Assembly Bill 2269 “premature” and said a “more flexible approach” was essential for the state because he believes blockchain technology is still evolving.
The veto came despite strong support in the state legislature, where the bill secured 71 “yes” votes, 0 “no” votes and nine abstentions.
If it had been signed into law, crypto firms would have been required to obtain a state-approved license to operate in California.
In his veto message, Newsom also cited the significant costs of implementing the bill, sharing that passing AB2269 would require a loan in the “tens of millions of dollars” for the state.
Notably, Newsom also wants to wait until the federal government’s stance on crypto regulation is solidified and the results of his May Executive Order on cryptocurrency are presented. Earlier this year, Newsom signed Order N-9-22 for his administration to investigate cryptocurrency and “establish a transparent regulatory environment” for it in California.
“It is premature to lock a licensing structure into statute without considering both this work and upcoming federal actions,” Newsom wrote in the memo.
Newsom isn’t the only one concerned about AB 2269. The Chamber of Progress — a pro-cryptotechnology policy coalition with partners like Amazon, Apple, Circle, FTX US and Meta — also took issue with aspects of the bill and called for more revisions back in June , which was incorporated into the final draft.
The Chamber of Progress then issued a new one memo approval of the final version of the bill, pending a few additional revisions. In particular, it did not want California to ban algorithmic stablecoin licenses and asked for clarification on which cryptocurrencies would fall under Institute for Financial Protection and Innovation.
But Chamber of Progress CEO Adam Kovacevich is actually happy with Newsom’s veto decision.
“This gives the California legislature a chance to take a less rushed, more inclusive approach to developing crypto regulations that protect consumers and allow innovation,” Kovacevich said in a statement. “There is a huge opportunity over the next few years for California and other states to get crypto regulation right.”
Attorney Hailey Lennon was also pleased with Newsom’s decision, calling it “great news” for the crypto industry.
Similarly, crypto lobby group Blockchain Association was excited by the veto news, calling the bill “misunderstood.”
“We applaud Governor Gavin Newsom’s veto of California Assembly Bill 2269, which threatened to stifle innovation and stop California’s burgeoning crypto industry in its tracks,” the group wrote in a statement.
The accolades continued to flow, as Jake Chervinsky, director of policy for the Blockchain Association, said Newsom “deserves serious respect” for rejecting AB 2269.
JW Verret, Associate Professor of Law at George Mason University, was also glad Newsom declined”crazy crypto reg bill.”
While crypto supporters are pleased with the veto, Assembly Speaker Tim Grayson – who introduced the bill – expressed his frustration on Twitter.
“The cryptocurrency market is underregulated at best and deliberately rigged against everyday consumers at worst,” Grayson argued in a statement.
But the regulatory battle in California is far from over.
“Assemblyman Grayson signaled he will reintroduce the bill,” Kovacevich wrote.
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