Gavin Newsom, the Governor of California refused to sign a bill (Assembly Bill 2269) that would establish a licensing and regulatory framework for digital assets. The bill strives to allow the issuance of operational licenses for crypto companies in California. As such, the California State Assembly passed the bill on September 1 with no opposition from the assembly floor and moved it to the governor for approval.
Newsom suggested a more flexible approach that would evolve over time while considering the safety of consumers and related costs He said it’s premature to lock a licensing structure in statute without considering both the work in-house efforts to create a transparent regulatory environment and forthcoming federal actions.
The governor believes that the bill requires loaning tens of millions of dollars from California’s general fund. Newsom said such a significant commitment of general fund resources should be considered and accounted for in the annual budget process. He is waiting for federal regulations to come into sharper focus for digital financial assets before working with the Legislature to establish crypto licensing initiatives. The governor pointed out that on May 4, he issued Executive Order N-9-22 to position California as the first state to establish a transparent regulatory environment that fosters responsible innovation, and protects consumers who use digital asset financial services and products within the context of a rapidly evolving federal regulatory picture.
Newsom shared that his administration has conducted extensive research and outreach over the last several months to gather input on approaches that balance the benefits and risks to consumers. It harmonizes with federal rules and incorporates California values such as equity, inclusivity, and environmental protection. He outlined that it would be premature to create a licensing regime without taking feedback from the executive order.
