California governor vetoes state’s ‘BitLicense’ bill, calls it premature

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California’s digital asset companies won’t have to adhere to the stringent regulations their New York counterparts have been operating under after the state’s governor vetoed a bill that would have introduced a strict licensing regime for virtual asset service providers (VASPs).

Assembly Bill 2269 was introduced by Assembly member Tim Grayson (D-Vallejo), and it sailed through California’s Senate and Assembly a month ago before heading to Governor Gavin Newsom’s desk for his signature. Most state legislators supported the bill, describing it as a “path for responsible innovation.” The bill also had its fair share of critics who claimed it would undermine the governor’s pledge to support digital asset innovation.

Newsom has now rejected the bill. In a letter to the State Assembly laying out why he had vetoed the bill, he stated that he prefers a more flexible approach.

“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,” the governor stated.

Laying out an entirely new regulatory framework is also a pretty costly undertaking, Newsom added. It would require tens of millions of dollars over the next few years.

However, Newsom isn’t opposed to regulating the industry and offering more protection to Californians. He pointed to his Executive Order that he signed in May, which he says made California the first state to “establish a transparent regulatory environment that both fosters responsible innovation, and protects consumers who use digital asset financial services and products – all within the context of a rapidly evolving federal regulatory picture.”

The bill had been criticized by some in the digital asset industry, most prominently lobby group Blockchain Association. The group applauded the veto, claiming it would cement California’s position as a ‘crypto innovation leader.’

We applaud Gov @GavinNewsom's veto of Assembly Bill 2269. By vetoing this bill, and remaining true to the spirit and intent of his EO, California’s status as a crypto innovation leader remains a shining example for the rest of the country.

Our statement: https://t.co/SEPJQtZYhu

— Blockchain Association (@BlockchainAssn) September 24, 2022

Grayson, who sponsored the bill, dissented from the governor’s stand but pledged to keep on fighting to protect Californian investors.

Watch: The BSV Global Blockchain Convention panel, Blockchain for Digital Transformation of Nations