The crypto sector can rejoice at having won a victory, following the veto opposed by the governor of California, Gavin Newsomto a bill to establish a licensing and regulatory framework for digital assets.
Dubbed Assembly Bill 2269, the bill was intended to create a licensing regime for anyone wishing to facilitate cryptocurrency transactions, increasing the regulatory hurdles players in the crypto ecosystem currently face. The bill was sponsored by Assemblyman Tim Grayson (D) and was passed by the Assembly and State Senate last month.
โIt is premature to lock such a structure into law without considering both this work (internal efforts to create a transparent regulatory environment) and future federal actions,โ Newsom reportedly said in his statement, adding:
โA more flexible approach is needed to ensure that regulatory oversight can keep up with rapidly changing technology and use cases, and to ensure that the right tools are available to respond to trends and mitigate damage to consumers.”
Newsom noted that before implementing licenses, it is desirable that federal regulations “be more specific for digital financial assets.”
If passed, the bill would have required all licensed entities in California to deal with stablecoins issued by banks or otherwise authorized by the state’s Department of Financial Protection and Innovation. Furthermore, it would have created a licensing regime comparable to the “BitLicense” from New York.
“At best, the crypto market is under-regulated and at worst, deliberately rigged against everyday consumers,” he said. added Grayson in his statement. “A financial market cannot be considered healthy if there are no safeguards in place to protect consumers from scams and malicious actors.”
Stablecoin issuers under scrutiny
The bill also focused on issuers of stablecoins, requiring them to own qualifying securities “whose aggregate market value, calculated in accordance with generally accepted accounting principles in the United States, is not less than the aggregate amount of all its outstanding stablecoins issued or sold in the United States”.
Stablecoins are under a lot of pressure, with Tether (UST) being the most controversial due to its opaque reserves. However, these digital assets are currently enjoying increased attention, largely due to the unprecedented collapse of UST, Terra’s algorithmic stablecoin.
This apparently prompted the House to draft new cryptocurrency regulations that would ban algorithmic stablecoins. According to a Bloomberg article, the House is aiming to put a two-year ban on Terra-like stablecoins, making it illegal to issue or create new โendogenously backed stablecoins.โ
Besides US regulators, lawmakers in other parts of the world have also stepped up their efforts to regulate stablecoins. For example, at the end of August, the central bank of Singapore, which has made stablecoin regulation a top priority, said it would consult with industry players on stablecoin regulation by October.
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