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California governor opposes cryptocurrency licensing for more flexibility

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Gavin Newsom, the governor of California, has refused to sign a bill that would establish a regulatory and licensing framework for digital assets. In his opinion, a “more flexible” approach towards crypto players is preferable to a structural blockade, which he considers premature.

No BitLicence encore in California

The governor of California does not want his state to follow in the footsteps of New York, which created already in 2015 a license for companies operating in the cryptocurrency space. He has therefore vetoed to a bill passed by the Assembly last month, which was awaiting approval to launch an encore BitLicense.

Recall that the BitLicense is a set of regulations developed by the New York State Department of Financial Services (NYDFS) for cryptocurrency-related businesses. It is a particularly demanding and complex license, considered intrusive by many players in the ecosystem, and it also comes at a high cost. Above all, it imposes unfair treatment between traditional banks and cryptocurrencies, many of which have given up operating in New York State.

A example not to be followed by Gavin Newsom who wants to encourage the presence of the crypto-industry in California..

It is premature to set a licensing structure. A more flexible approach is needed to ensure that regulatory oversight can keep pace with rapidly evolving technology and use cases, and adapt with the right tools to respond to trends and mitigate harm to consumers.

Gavin Newsom, Governor of California, in his September 23 letter to the State Assembly.

Ensuring a competitive California for the cryptocurrency sector.

In May 2022, as he recalled in his response to the Assembly, he had issued an executive order to make California the first state to establish a transparent regulatory environment. A framework that would allow cryptocurrency companies to operate with peace of mind while protecting users. Since then, his administration has struggled to find a way to bring this goal in line with federal law. And obviously, the proposed law misses the mark from his point of view.

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It also puts highlights the cost of this new regulatory program.which is not accounted for in California’s annual budget process.

[Ce serait] costly undertaking. This bill would require borrowing from the general fund in the tens of millions of dollars during the first few years.

Gavin Newsom, Governor of California, in his September 23 letter to the State Assembly.

However, after noting an overwhelming majority in favor of the bill – 71 votes in favor, zero against and nine abstentions – he pledged to work with the Legislature to achieve appropriate regulatory clarity, ensuring that California remains a competitive place for businesses to invest and innovate, while protecting “consumers from scams and bad actors.”

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