New California Crypto Regulation Designed To Manage The Crypto Boom

a year ago

According to Bloomberg Law, California’s Governor Gavin Newsom has signed into law a new measure aimed at regulating the state’s booming cryptocurrency industry, home to nearly a quarter of North America’s blockchain companies.

California Crypto Regulation Issued to Manage Market Volatility

The new California crypto regulation comes as a response to the increasing urgency following last year’s collapse of the FTX exchange and other market turmoil, as federal action looms uncertain. State legislators are now seeking to establish a foundational regulatory framework.

Newsom, a prominent advocate for blockchain and crypto technology within the Democratic Party, had previously vetoed similar legislation. His recent efforts to bolster the sector while fending off new state-level regulations have encountered untimely challenges.

Governor Newsom’s Response to Crypto Industry Challenges

In May 2022, Newsom issued an executive order to promote blockchain research and innovation and explore its government applications. However, this coincided with the implosion of two prominent cryptocurrencies and a market collapse. Shortly thereafter, the Celsius Network, a major cryptocurrency exchange, declared bankruptcy, impacting over 48,000 Californians with assets worth $650 million.

Since his initial veto, the crypto exchange FTX has filed for bankruptcy, and its former CEO, Sam Bankman-Fried, a supporter of Newsom’s executive order, faces multiple federal charges. Additionally, crypto prices have continued to decline, and the anticipated federal legislation to regulate the volatile crypto industry remains in limbo.

California crypto regulation signifies the state’s determination to address the regulatory void in the cryptocurrency space, providing a framework for the industry’s continued growth while managing potential risks and ensuring consumer protection.

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