Last Updated on September 25, 2022 by Bitfinsider

A law that would have required crypto financial service providers to obtain a special license in order to operate was vetoed by California Governor Gavin Newsom because he deemed it to be premature and expensive.

The Digital Financial Assets Law, which was approved by the state senate and assembly last month, was not approved by Newsom on Friday. While the governor claimed to support the bill’s goals of safeguarding Californians from financial harm and establishing clear regulations for the sector, his administration has been gathering information and doing study to determine the best course of action.

Newsom stated: “It is premature to lock a licensing structure in statute without considering both this work and forthcoming federal actions,” and further added that “A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.”

A “significant” commitment that needs to be taken into consideration in the state’s annual budgeting process is required under the bill, according to Newsom. It would necessitate a borrowing of “tens of millions of dollars” from the general fund during the first few years.

The Blockchain Association, a crypto lobbying group, and other industry supporters had opposed the law, arguing last month that it “creates shortsighted and unhelpful restrictions that would impede crypto innovators’ ability to operate and push many out of the state.”