California places new demand on VASPs as crypto bill becomes law
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Governor Gavin Newsom of California has officially signed a new bill into law, marking a pivotal moment for the Golden State’s crypto landscape. This measure, which regulates California’s burgeoning crypto industry, has been met with enthusiasm by both supporters and skeptics of the digital asset space.
According to reports, the crypto bill, which was passed by the California legislature in August, primarily requires crypto companies to obtain a license to operate within the state.
This legislation comes on the heels of growing concerns following last year’s collapse of the FTX exchange and other market tumult. As federal action remains uncertain, California lawmakers have taken it upon themselves to establish a foundational regulatory framework for the industry.
Governor Newsom has been an outspoken supporter of blockchain and crypto technologies. It is worth noting that this is not the first time California has attempted to regulate the crypto industry. In a similar move last year, Governor Newsom dismissed a bill, citing concerns that it resembled New York’s BitLicense regulation, which is often criticized for its strict approach to crypto regulation.
Implementation of California’s crypto law
The new rule is set to take effect in January 2025, providing crypto companies time to respond to the legal changes. Notably, the law expands its regulatory reach to include stablecoins. Under this law, stablecoins must either be issued by a bank or be licensed by the California Department of Financial Protection and Innovation.
Additionally, the market value of stablecoins will be calculated using generally accepted accounting principles (GAAP) of the United States. This regulatory step aims to ensure the stability and security of these digital assets, protecting both issuers and users.
This new California law also clarifies which federal agency, the SEC or the Commodity Futures Trading Commission (CFTC), has the authority to regulate the crypto businesses in the United States. This is an important step in defining the regulatory landscape for cryptocurrencies, which have grown to be an important part of the global financial system.
About the author
Godfrey Benjamin is an experienced crypto journalist whose main goal is to educate everyone around him about the prospects of Web 3.0. His love for crypto was birthed when, as a former banker, he discovered the obvious advantages of decentralized money over traditional payments. With his vast experience covering various aspects of Web3, Godfrey’s articles has been featured on Blockchain.news, Cryptonews and Coingape, among others.
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