By
Benjamin Njiri
April 23rd, 2024
California appears to be the state with the most interest in Bitcoin (BTC) and Ether (ETH) based on internet search data.
The California State Assembly has unanimously passed the Digital Financial Assets Bill creating tighter restrictions for crypto firms operating in the state.
Sponsored by Assemblyman Timothy Grayson, the new bill seeks to provide necessary protection for crypto market participants. Also, it will promote a healthy cryptocurrency market in the state. The bill mandates digital asset exchanges and crypto firms to obtain an operating license from the state’s Department of Financial Protection and Innovation. If signed, it will take effect from January 1, 2025
What the Digital Financial Assets Bill Entails
The Digital Financial Assets law is similar to New York’s BitLicense. The New York Government signed BitLicense into law at the same time a similar California law fell through in 2015.
The new bill summarily prohibits operating in the state without a license. Where violation occurs, the culprits would pay a daily fine of $100,000. Additionally, the requirement prohibits California-licensed entities from dealing with stablecoins. The prohibition affects all stablecoins which are not issued by a bank or licensed by the California Department of Financial Protection and Innovation. The prohibition will phase out in 2028.
Likewise, the bill specifies using the generally accepted accounting principles (GAAP) to calculate the aggregate market value of assets. The new bill would also allow the department to probe licensees. It’s now up to Governor Gavin Newsom to either accept the motion or veto it.
Reactions to the Bill
According to CoinGecko, California appears to be the state with the most interest in Bitcoin (BTC) and Ether (ETH) based on internet search data. Previously, the state also allowed crypto donations to political campaigns.
Given the level of interest of California citizens in cryptocurrency, Assemblyman Grayson believes the bill will make the cryptocurrency market safer for all participants. He said:
“A healthy cryptocurrency market can only exist if simple guardrails are established.”
Meanwhile, the Blockchain Association considers the bill to be unnecessarily restrictive. The group tweeted that the bill would be an industry trade group, tweeted that the bill would “impede crypto innovators’ ability to operate.” The bill could also send several crypto firms out of the state.
Whether or not Governor Newsom will sign the bill into law is anybody’s guess at the time.