The State of California wants a stricter monitoring of crypto activities because of the increased Chinese mining crypto in USA since China banned mining in 2021, no doubt, but the State of New York has set a not so successful precedent.
CALIFORNIA WANTS TO REGULATE CRYPTO INDUSTRY…
Last week, California has enacted the Digital Financial Assets Law, raising concerns within the cryptocurrency industry due to potential consequences. The law, signed by Governor Gavin Newsom, aims to regulate the state’s crypto industry, home to a significant portion of North America’s blockchain companies. The law imposes strict licensing requirements for those involved in digital financial asset activities and raises uncertainties about licensing decentralized systems and the treatment of non-fungible tokens (NFTs) and non-fiat stablecoins.
… BUT NEW YORK HAS ALREADY DONE IT UNSUCCESSFULLY….
This development is reminiscent of New York’s BitLicense bill, which drew backlash from the digital asset sector in 2015. Prominent crypto companies like Kraken, Bitfinex, and LocalBitcoins had previously left New York in response to the BitLicense. Even Coinbase, the largest US crypto exchange, criticized California’s bill, fearing it might drive companies out of the state due to unclear regulations. While Coinbase has no plans to exit California, Kraken’s response is more measured, expressing a commitment to collaborate with regulators.
… SO WHAT’S NEXT?
The industry emphasizes the importance of engaging with regulators to shape clear and effective legislation. The global effort to regulate the digital asset sector has gained momentum, driven by events like the collapse of cryptocurrency exchange FTX. The recent G20 Finance Ministers and Central Bank Governors’ adoption of a “comprehensive roadmap for crypto asset regulation to enhance financial stability” highlights this prioritization.
