California State Assembly Passes Crypto Regulation Bill That is Criticized by Industry Stakeholders

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.
• Among the requirements is a prohibition, which would be phased out in 2028, on California-licensed entities dealing with stablecoins, unless that stablecoin is issued by a bank or is licensed by the California Department of Financial Protection and Innovation.
  • This is similar to a proposed (and never passed) bill in the U.S. Congress that would require stablecoin issuers to have a bank charter.

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• The bill would require stablecoin issuers that hold securities as a reserve to have an amount "not less than the aggregate amount of all of its outstanding stablecoins issued or sold in the United States.
  • aggregate market value must be computed using the generally accepted accounting principles (GAAP) of the United States.

The Blockchain Association, an industry trade group, tweeted :

[The bill would] create shortsighted and unhelpful restrictions that would impede crypto innovators’ ability to operate and push many out of the state.