New California State Legislation Will Require Crypto Exchange Licenses and Support Bank-Issued Stablecoins

 California's state government may introduce a new crypto-centric measure to clarify the legal issues surrounding the sector. This law, known as "BitLincese," will require crypto exchanges to apply for and obtain operational licenses in the state. In addition, stablecoin issuers would be required to obtain a bank charter under this measure. The United States is currently the second-most crypto-friendly nation in the world, after Hong Kong, according to the most recent "Worldwide Crypto Readiness Report" by Foresx Suggest.

Currently, the measure awaits the signature of California Governor Gavin Newsom for passage.

"The bill's licensing measures are intended to implement the same burdensome licensing and reporting framework that has stifled the growth of the crypto industry and restricted access to safe and dependable crypto products and services in New York. Additionally, it would make it hard for many stablecoin issuers to operate within the state to produce enormous economic activity and create countless employment, according to a Twitter thread by The Blockchain Association, an industry trade group.

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The deadline for Newsom to sign or veto the bill is September 30, according to an article by Coindesk.

Earlier in 2015, New York enacted a similar bill to regulate the crypto industry in its domain.

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"While the novelty of cryptocurrency is part of what makes investing exciting, it also makes it riskier for consumers because cryptocurrency businesses are not adequately regulated and are not required to follow many of the same rules that apply to everyone else," said bill sponsor Timothy Grayson (D-Concord) in a previous statement.

In spite of the absence of crypto-specific legislation in the United States, law enforcement officials there are making concerted attempts to protect the crypto community from unforeseen financial hazards.

In August, for example, the US Federal Reserve released new instructions for banks contemplating activities with cryptocurrencies, emphasizing that enterprises must notify the Fed in advance and ensure that their actions are legal.

In the supervisory letter, the Fed advised banks monitored by the agency to take a number of precautions before engaging in crypto-related operations, including assessing whether certain filings are required by law and whether the actions under consideration are legal.