California Gov. Gavin Newsom is set to sign a recently passed bill that would require digital asset exchanges and other crypto companies to obtain a license to operate in the state.
The Digital Financial Assets Law, dubbed California’s “BitLicense,” takes after New York’s BitLicense regulation, which came into effect in 2015. California’s law, if signed by Newsom, a Democrat, would go into effect in January 2025.
“While the newness of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not adequately regulated and do not have to follow many of the same rules that apply to everyone else,” Assembly Member Timothy Grayson (D-Concord), the bill’s sponsor, said in a prior statement.
California’s bill tends to come down on the consumer protection side, with the Blockchain Association saying that it “threatens to undermine” the commitment California’s Democratic governor made to foster “this next wave of innovators” in his May executive order calling for crypto regulation.
“The bill’s licensing provisions are designed to install the same type of onerous licensing and reporting regime that has stunted the growth of the crypto industry and limited access to safe and reliable crypto products and services in New York,” it said, referring to the New York Department of Financial Services’ BitLicense.