California Signs One of The First Crypto Regulation Bills in The US

TL;DR

• The legislation will require crypto companies to comply with licensing prerequisites, uphold financial record-keeping standards, and grant regulatory bodies the power to perform audits.
• This move comes in response to concerns from last year’s FTX exchange collapse and broader market turbulence. 

California Enacts First Crypto Regulation Bill

Governor Gavin Newsom of California has officially signed a groundbreaking bill into law, marking a significant moment for the cryptocurrency industry within the Golden State. 

The legislation, which aims to regulate California’s rapidly expanding crypto sector, has garnered widespread support from advocates and critics of digital assets.

As reported, the California legislature passed the crypto bill in August, which primarily mandates that cryptocurrency companies obtain licenses to operate within the state.

This move comes in response to concerns stemming from last year’s FTX exchange collapse and broader market turbulence. 

In light of the uncertain federal regulatory landscape, California lawmakers have taken the initiative to establish a foundational framework for the industry.

Governor Newsom has been a vocal proponent of blockchain and crypto technologies. 

Notably, this isn’t the first attempt by California to regulate the crypto sector. 

In a similar move last year, Governor Newsom rejected a bill, expressing worries that it mirrored New York’s stringent BitLicense regulation, widely criticized for its strict approach to crypto oversight.

Implementation of California’s Crypto Legislation 

The new regulations are scheduled to take effect in January 2025, providing cryptocurrency companies with ample time to adapt to the legal changes. 

Importantly, the law extends its regulatory scope to encompass stablecoins. 

Under these provisions, stablecoins must either be issued by a bank or acquire licensing from the California Department of Financial Protection and Innovation.

Furthermore, the market value of stablecoins will be calculated using the generally accepted accounting principles of the United States. 

This regulatory measure aims to ensure the stability and security of these digital assets, safeguarding the interests of both issuers and users.

This newly enacted California law clarifies which federal agency, the SEC or the CFTC, holds the authority to regulate cryptocurrency businesses in the United States. 

This marks a crucial step in defining the regulatory landscape for cryptocurrencies, which have become a pivotal component of the global financial system.

Regulatory Concerns in the United States

The regulatory environment for cryptocurrencies in the United States is intricate and continually changing. 

With Gavin Newsom signing a law to create regulatory framework for digital assets in California this makes me happy that we’re moving forward.

However, I don’t trust him to make good decisions as he’s failed to do that for our children and innocent civilians.

cc @DCTAorg we… https://t.co/A8YKXWqi14

— Wendy O (@CryptoWendyO) October 14, 2023

The Securities and Exchange Commission has provided guidance on categorizing digital assets as securities, ordering crypto exchanges like Coinbase to delist all assets besides Bitcoin. 

Meanwhile, the CFTC has classified certain digital assets as commodities. 

Furthermore, the Financial Crimes Enforcement Network has instituted anti-money laundering and know-your-customer regulations for cryptocurrency exchanges. 

In Congress, ongoing endeavors aim to introduce comprehensive cryptocurrency legislation, though a definitive consensus has not yet been achieved.

Do you think the US Government will ever decide on a crypto regulation like California?