Benzinga - On Friday, California Governor Gavin Newsom, one of the Democratic Party’s most prominent promoters and defenders of blockchain and crypto technologies, signed a Crypto licensing bill to build a regulatory framework for cryptocurrencies. He had earlier refused to accept New York’s BitLicense regulation, a stricter approach towards crypto.
What Happened: Newsom approved a bill that will launch cryptocurrency industry regulations in the state. The law directs California's Department of Financial Protection and Innovation (DFPI) to create a regulatory framework for crypto companies.
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The legislation indicates that certain terms and the breadth of the law need further clarification to better serve consumers, regulators, and businesses within this licensing structure. The DFPI has been allotted an 18-month period to carry out these implementations.
The bill looks to maintain an effective balance between consumer protection and developing a responsible innovation environment.
Why It Matters: Following the FTX debacle and numerous other crypto setbacks related to regulatory compliance, California legislators approved the bill on Aug. 31. The legislation also sheds light on whether the SEC or the CFTC will hold jurisdiction over regulating the U.S. cryptocurrency sector, CoinGape reports.
The law will also expand crypto regulatory aspects to stablecoins which states that they must be issued by a bank or licensed by the California Department of Financial Protection and Innovation. The market cap of the stablecoins will be calculated based on the U.S. Generally Accepted Accounting Principles (GAAP).
California accounts for almost 25% of the blockchain and digital asset companies in North America, according to CoinGape.
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