California’s recent move to introduce its own version of the BitLicense bill, following in the footsteps of New York’s regulatory framework, has triggered varied responses within the digital asset industry.
This development, signed into law by Governor Gavin Newsom, has raised concerns and skepticism among major crypto entities, reminiscent of the backlash experienced by the industry when New York implemented similar measures in 2015.
New York’s 2015 BitLicense Bill
On 3 June, 2015, the New York Department of Financial Services released its final BitLicense regulations, which Superintendent Benjamin Lawsky described as “the first comprehensive framework for regulating digital currency firms.
The 2015 BitLicense bill in New York faced substantial criticism from industry players, with Kraken notably denouncing it as “abominable.”
At that time, prominent crypto brands like Kraken, Bitfinex, and LocalBitcoins opted to cease operations within the state, citing the restrictive nature of the legislation.
Similarly, Coinbase had also voiced concerns about duplicating federal anti-money laundering (AML) obligations, indicating potential redundancies within the regulatory framework.
Responses From California’s BitLicense Bill
California’s Digital Financial Assets Law seeks to establish a comprehensive regulatory framework for the state’s burgeoning crypto industry, with the bill slated to come into effect in July 2025.
With California hosting a significant share of the nation’s blockchain enterprises, including prominent entities such as Jack Dorsey’s Block, concerns have emerged that vague regulations akin to New York’s BitLicense could potentially prompt the departure of digital asset businesses.
Coinbase’s Chief Legal Officer, Paul Grewal, tweeted:
Crypto Firms Leave California?
Considering the upcoming regulatory changes in California which will take place in 2025, there is a possibility of significantly stringent rules, particularly affecting financial business entities and the cryptocurrency sector.
The new regulation California AB39 wrote:
This bill, the Digital Financial Assets Law, would, on and after July 1, 2025, prohibit a person from engaging in digital financial asset business activity, or holding itself out as being able to engage in digital financial asset business activity, with or on behalf of a resident unless any of certain criteria are met, including the person is licensed with the Department of Financial Protection and Innovation, as prescribed.
Such measures may lead to an exodus of crypto firms from the state, similar to the scenario observed following the implementation of New York’s BitLicense.