California Governor Rejected Regulatory Bill Passed By Assembly Lawmakers

On August 30, legislators of the California State Assembly passed a bill on Digital Financial Asset Law. The bill, dubbed AB 2269, reached tor Gavin Newsom, Governor of California, for final approval without a single objection by assembly members.

The proposed notion required crypto companies to achieve a regulatory license from the Department of Financial Protection and Innovation in order to operate in the regime and suggested applying hefty penalties for crypto platforms that commit prohibited activities.

Interestingly, Gavin Newsom returned the bill without approving it and went on to say that the underscored legislation may prove “ premature and costly.” Newsom instead referred to designing a “more flexible approach” to meet the ever-changing crypto ecosystem needs. 

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Admiring that governments have been struggling to protect users and drive a transparent regulatory framework for the crypto ecosystem, Governor urged the bill in question does not suit the crypto market environment completely. Newsom added in a statement published on Thursday;

Over the last several months, my Administration has conducted extensive research and outreach to gather input on approaches that balance the benefits and risk to consumers, harmonize with federal rules, and incorporate California values such as equity, inclusivity, and environmental protection. It is premature to lock a licensing structure in statute without considering both this work and forthcoming federal actions.

Moreover, he expressed his worries about the need for millions of dollars in loans from the general fund needed in the starting years to establish a regulatory licensing framework. “Such a significant commitment of general fund resources should be considered,” he said

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Newsom Awaits Comprehensive Regulatory Framework Of Federal Agencies

The governor pointed toward the comprehensive regulatory approach currently being considered by several federal authorities following Biden’s order. Once the federal authorities finalize the analysis and introduce complete rules for the evolving crypto sector, he will then collaborate with California officials to implement a more relative and suitable regulatory framework, per the latest note. 

After six months of research conducted by federal authorities, the White House’s official website published a fact sheet of six core principles on September 16. The facts provide directions to be considered to design complete regulations in the U.S. Alongside the focus on preventing illicit financing, the report also took innovative development growth into account, among other concerns. 

Similarly, the Office of Science and Technology Policy (OSTP) submitted an analysis report to the White House covering the potential 18 design frameworks for United States’ CBDC projects. The experts following the research highlight difficulties and complexity in the practical implementation of building a permissionless system supervised by the central bank. 

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The report dubbed “TECHNICAL DESIGN CHOICES FOR A U.S. CENTRAL BANK DIGITAL CURRENCY SYSTEM” reads:

It is possible that the technology underpinning a permissionless approach will improve significantly over time, which might make it more suitable to be used in a CBDC system.

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