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California Governor Gavin Newsom has rejected a bill that would have imposed stricter regulatory measures for crypto businesses that operate in the Golden State.
Assembly Bill 2269, also known as the Digital Financial Assets Law, sought to require crypto companies such as exchanges to get a license from California’s Department of Financial Protection and Innovation – otherwise, they could pay up to $100,000 in penalties for each day of violation.
In a letter addressed to the members of the California State Assembly, Newsom explains why he vetoed the proposed legislation while also saying that the public needs to be protected from the risks of crypto-related services and products.
“It is premature to lock a licensing structure in statute without considering both this work and forthcoming federal actions. A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.”
Newsom says that approving the bill will come with some financial repercussions that could affect the state’s budget.
“Standing up a new regulatory program is a costly undertaking, and this bill would require a loan from the general fund in the tens of millions of dollars for the first several years. Such a significant commitment of general fund resources should be considered and accounted for in the annual budget process.”
The governor says he is willing to work with the legislature once federal regulators establish clearer policies on digital assets.
“I am committed to working collaboratively with the Legislature to achieve the appropriate regulatory clarity once federal regulations come into sharper focus for digital financial assets, while ensuring California remains a competitive place for companies to invest and innovate.”
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