California's Crypto Regulation: Will It Push Firms Out?
California has signed the Digital Financial Assets Law, raising concerns within the industry regarding the potential consequences of this legislation.
On Friday, Governor Gavin Newsom signed the bill into law, aiming to regulate California's cryptocurrency industry, which is home to nearly a quarter of the blockchain companies in North America.
The move is similar to New York's controversial BitLicense bill, which faced significant backlash from the digital asset industry when announced in 2015.
Kraken, one of America's prominent crypto brands at the time, labeled it "abominable" and joined other companies like Bitfinex and LocalBitcoins in exiting the state entirely.
Even Coinbase, the largest crypto exchange in the US, criticized the bill for duplicating federal anti-money laundering obligations and suggested necessary changes.
This year, Coinbase paid a $50 million penalty for compliance program failures.
In a recent post on X (formerly Twitter), Coinbase's Chief Legal Officer Paul Grewal claimed there is some hope so far.
"We're encouraged by Gavin Newsom's statement calling this out and emphasizing that "it is essential that we strike the appropriate balance between protecting consumers from harm and fostering responsible innovation," he wrote.
However, concerns persist as California is home to a quarter of the country's blockchain firms, including major players like Jack Dorsey's Block.
Many fear that unclear regulations could potentially drive these companies out of the state.
The current version of the bill includes stringent criteria that would require individuals engaging in digital financial asset business activity to obtain a license from the Department of Financial Protection and Innovation.
Additionally, the
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