California Governor Gavin Newsom has signed a bill into law that would establish a BitLicense licensing regime similar to that of New York.
According to Governor Newsom, the recently passed cryptocurrency licensing bill will allow for the construction of a robust regulatory framework, similar to the BitLicense, where risks related to the crypto industry are minimized and innovation is encouraged.
The Governor's Office published a official statement The new bill will take effect in June 2025. A period of 18 months will be enough time for companies in the crypto industry to adapt and comply with the regulation, the California Governor's Office said.
On the other hand, Governor Newsom noted that “it is essential that we strike the right balance between protecting consumers from harm and encouraging responsible innovation” and stressed that he looks forward to working together with the author of the bill to build a new legal environment for cryptocurrencies in the state.
What does the new regulation mean for cryptocurrency companies in California?
The bill in question, the Digital Financial Assets Act, seeks to implement a new cryptocurrency licensing regime in California in order to mitigate risks which involves operating in the crypto market.
The text of the law details that all trading and negotiation activity with digital assets should occur under a regulatory regime appropriate and that all companies and service providers with crypto assets should get a license based on their services to operate legally within the state.
The law in question appoints the US Department of Financial Protection and Innovation (DFPI) as the primary regulator of cryptocurrencies in California and mandates that all persons and entities engaged in cryptocurrency trading activities must possess a regulatory license issued by this department.
According to Governor Newsom, increased protection of consumers and investors in the crypto market will prevent fraud and ensure that bad actors are held accountable. In addition to this, he highlighted the need to create regulation that can address crypto industry trends and drive innovation and development.
However, because the licensing regime that California seeks to implement will be similar to that existing in New York through the BitLicense, some are worried due to the unnecessary requirements that the state could require for companies to obtain their respective licenses.
The Digital Financial Assets Act bill had been vetoed by Governor Newsom in September of last year, after receiving approval from members of the California Assembly. At the time, the governor clarified that it would be hasty to approve a bill without first considering the comments and needs of the parties involved.
“A more flexible approach is needed to ensure that regulatory oversight can keep pace with rapidly evolving technology and use cases,” the governor said.
Currently, the state of California is one of the most friendly to the crypto industry. Last year, the state passed several measures targeting cryptocurrencies, such as the executive order signed by the regulator to advance the development of Web3 at the state level.
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