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Governor Gavin Newsom of California has signed a bill that will regulate the state’s crypto sector and require digital asset companies to get licenses.
According to Bloomberg Law, Newsom has enacted two significant crypto-related legislative measures.
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 Today California is taking the necessary step to regulate a market that is volatile, risky, and, in some cases, deliberately rigged against everyday consumers. Thank you to Governor Newsom for helping ensure that our state leads in fostering responsible innovation. <a href="https://twitter.com/hashtag/AB39?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">#AB39</a> <a href="https://twitter.com/hashtag/SB401?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">#SB401</a> <a href="https://t.co/QnPTdNALWS" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/QnPTdNALWS</a>— Tim Grayson (@AsmGrayson) <a href="https://twitter.com/AsmGrayson/status/1713042751292613057?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">October 14, 2023</a>
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The new laws aim to create a solid regulatory framework for cryptocurrency businesses and amplify data privacy protections for Californians.
California’s state legislature <a href="https://crypto.news/californian-assembly-passes-crypto-licensing-bill/" target="_blank" rel="noopener noreferrer nofollow">passed</a> the crypto bill in August 2023, almost a year after Gov. Newsom <a href="https://crypto.news/governor-gavin-newsom-vetoes-californias-bitlicense-bill/" target="_blank" rel="noopener noreferrer nofollow">vetoed</a> a similar one, claiming the state needed a more flexible approach to virtual currency regulation.
Per the Bloomberg Law <a href="https://news.bloomberglaw.com/crypto/gov-newsom-signs-crypto-licensing-bill-in-california" target="_blank" data-type="link" data-id="https://news.bloomberglaw.com/crypto/gov-newsom-signs-crypto-licensing-bill-in-california" rel="noopener noreferrer nofollow">report</a>, critical provisions of the crypto law will establish rudimentary regulations for crypto firms and demand that such companies adhere to specific licensing requirements.
It also extends regulatory measures to asset-backed cryptocurrencies such as <a href="https://crypto.news/circle-incorporates-usdc-on-polygon/" target="_blank" rel="noopener noreferrer nofollow">USDC</a> and USDT. The bill calls for complete reserves to be maintained for such stablecoins, a step that could endanger <a href="https://www.forbes.com/sites/digital-assets/article/what-are-algorithmic-stablecoins/" target="_blank" data-type="link" data-id="https://www.forbes.com/sites/digital-assets/article/what-are-algorithmic-stablecoins/" rel="noopener noreferrer nofollow">algorithmic stablecoins</a>, which preserve parity with the dollar using different mechanisms.
You might also like: <a href="https://crypto.news/coinbases-tax-chief-urges-irs-to-reevaluate-crypto-tax-regulations/" rel="noopener noreferrer nofollow"> Coinbase’s tax chief urges IRS to reevaluate crypto tax regulations </a>
On the other hand, the data privacy law, known as the Delete Act, will obligate data brokers, businesses that aggregate information from various sources, to <a href="https://www.latimes.com/california/story/2023-10-10/newsom-bill-delete-online-personal-data" target="_blank" rel="noopener noreferrer nofollow">erase</a> all personal data collected about an individual upon their request.
This increased regulatory oversight may bring challenges for the crypto industry and data brokers. While it could deter fraudulent activities and improve transparency, it could also burgeon operating costs and potentially stifle innovation.
The Crypto Council for Innovation, a collective that counts Coinbase Global and venture capital powerhouse Andreessen Horowitz among its members, has expressed <a href="https://finance.yahoo.com/news/california-moves-closer-implementing-crypto-005721696.html" target="_blank" rel="noopener noreferrer nofollow">concerns</a> over the current formulation of the law.
Their reservations chiefly revolve around the stipulations for stablecoins and the lack of provision for licensing waivers for smaller enterprises or entities already registered with the Commodity Futures Trading Commission (CFTC).
Read more: <a href="https://crypto.news/coinbase-launches-campaign-for-balanced-crypto-regulations-in-us/" rel="noopener noreferrer nofollow"> Coinbase launches campaign for balanced crypto regulations in US </a>

California Governor Gavin Newsom signs bill regulating crypto

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