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HomeLaw & PoliticsCalifornia Assembly passes Crypto Regulation Bill mandating bank-issued stablecoins

California Assembly passes Crypto Regulation Bill mandating bank-issued stablecoins

The Crypto Regulation Bill, which mandates that crypto exchanges and other businesses seek for licences in order to conduct business in California. Gavin Newsom, the governor of California, is expected to sign it. California’s law would go into force in January 2025 if Democratic Governor Gavin Newsom supports it.

The bill’s sponsor, Assembly Member Timothy Grayson (D-Concord), said in a previous statement:

“While the discovery of cryptocurrencies contributes to the excitement of investing, it also increases risk for consumers because cryptocurrency businesses are not sufficiently regulated and do not have to adhere to many of the same rules that apply to everyone else.”

One of the requirements is an expiry date of 2028 for the restriction on stablecoin trading by California-licensed businesses. A stablecoin cannot be exchanged unless it has been approved by the California Department of Financial Protection and Innovation or has been issued by a bank. This is similar to a bill that was put up in the US Congress but was never adopted and would have forced stablecoin issuers to obtain a bank charter.

Stablecoin issuers must maintain reserves that are “not less than the aggregate amount of all of their outstanding stablecoins issued or sold in the United States,” according to another clause in the stablecoin part of the bill. The bill also requires that US generally accepted accounting principles be used to determine the entire market value . A set of accounting standards have been created by the Financial Accounting Standards Board. According to the Blockchain Association, a trade group for crypto industry, the bill will “create myopic and unhelpful constraints that would impede crypto entrepreneurs’ ability to function and push them out of the state” .

California is making a second attempt to implement a Crypto Regulation Bill. The original effort, which was made in 2015, was unsuccessful and placed on hold as a result of a state lawmaker’s complaints. By September 30, Newsom must either sign or veto the measure.

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Vaishali Goel
Technology enthusiast, explorer and academic scholar. Currently exploring the crypto world. Join me in my journey to see how crypto, NFT and Metaverse will change the world.
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