California Governor Rejected Regulatory Bill Passed By Assembly Lawmakers
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On August 30, lawmakers in the California State Assembly passed the Digital Financial Assets Act. The bill, called AB 2269, reached California Governor Tor Gavin Newsom’s final approval without opposition from members of the Assembly.
The proposed idea required crypto companies to obtain an administrative license from the Department of Financial Protection and Innovation to operate in the system and proposed heavy penalties for crypto platforms that engage in prohibited activities.
Interestingly, Gavin Newsom returned the bill without approving it, continuing that the underlined legislation could prove “premature and costly.” Newsom instead referred to the design of a “more flexible approach” to meet the ever-changing needs of the crypto ecosystem.
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The governor admires that governments have struggled to protect users and create a transparent regulatory framework for the crypto ecosystem, and urged that the bill in question is not entirely suitable for the environment of the crypto market. Newsom added in a statement released on Thursday;
Over the past several months, my administration has conducted extensive research and outreach to gather feedback on approaches that balance consumer benefits and risks, are consistent with federal rules, and incorporate California values such as equity, inclusion, and environmental stewardship. It is premature to lock the licensing structure into regulation without considering both this work and future federal action.
In addition, he expressed concern about the need for millions of dollars in loans from the general fund needed in the initial years to establish a regulatory licensing framework. “Such a significant commitment of general fund funds should be considered,” he said
Newsom expects a comprehensive regulatory framework for federal agencies
The governor pointed to comprehensive regulation that several federal officials are considering under Biden’s order. Once federal officials complete their analysis and implement full rules for the emerging crypto sector, he will work with California officials to implement a more proportionate and appropriate regulatory framework, according to the latest memo.
After a six-month investigation by federal officials, a fact sheet with six core principles was published on September 16 on the White House’s official website. The facts provide guidelines that can be considered in the design of complete regulations in the U.S. In addition to focusing on preventing illegal financing, the report also took into account the growth of innovative development, among other things.
Likewise, the Office of Science and Technology Policy (OSTP) provided the White House with an analysis report covering 18 potential design frameworks for US CBDC projects. The experts following the research emphasize the difficulties and complexity of the practical implementation of the construction of an unauthorized system supervised by the central bank.
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The report is titled “TECHNICAL DESIGN SYSTEM FOR A DIGITAL CURRENCY SYSTEM FOR THE UNITED STATES FEDERAL BANK”. reads:
It is possible that the technology based on the permissionless approach will improve significantly over time, which may make it more suitable for use in a CBDC system.
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