California could become one of the first states in the US to require all crypto businesses and companies to get a special license for operating.
How can it make it happen? All it needs is a simple signature from the governor and it will be good to go.
AB 2269 is the bill that had been introduced by Timothy Grayson, a member of the California Assembly, with the support of the Consumer Federation of California.
The Digital Financial Assets Law will be established in California with the help of this bill. On Monday, the Senate gave its approval for the legislation and the Assembly voted for its approval the next day.
Now, the bill will go to Gavin Newsom, the California Governor, as his signature is required for officially introducing it as a law in the state.
Grayson said that the purpose of the proposed law was to protect the state’s residents from any financial problems.
In addition, he said that it would help in fostering innovation in California by requiring crypto exchanges to get a license, which means their activities would be regulated.
He also stated that the licensees would be obligated to act in a consumer’s best interest when they make a crypto recommendation.
The risk and protection
According to a press release, Grayson stated that the newness of crypto has made it an exciting investment for people.
But, he also said that this makes it riskier as well because there is no adequate regulation for crypto businesses and they do not follow the same rules that are applicable to others.
The office of the assembly member said that using the Department of Financial Innovation and Protection (DEPI) to license digital financial assets firms would provide regulatory clarity to the industry.
In this way, consumers would be able to benefit from established protections. Grayson said that the bill would give basic protections to consumers, which are essential and can promote a safer and healthy market.
Of course, it is not surprising that the bill also has some critics and these include the Blockchain Association.
It said that introducing unhelpful and shortsighted restrictions for the crypto space would only stifle innovation in California.
It also added that this would not be in line with the stated vision of the California governor in terms of crypto policy for the state.
The Blockchain Association said that the licensing provisions in the bill in question are aimed at introducing the same kind of licensing and reporting standards that have restricted the growth of the crypto space.
It asserted that this regime would also limit the access of the public in New York to reliable and safe crypto products and services.
There has been no indication from the California Governor about whether he will sign the bill or not. He has time until September 30th to make the decision.
If he decides to give his approval, the legislation would go into effect from January 2025.