For decades, California has served as the beachhead for innovators, and in May, Governor Gavin Newsom sought to support innovation in the digital asset space with his Executive Order N-9-22 (EO), to “create a transparent regulatory and business environment for web3 companies, harmonize federal and the state regulations, protect consumers, and to engender equity, inclusivity, and environmental protection.”

Given such clear direction, then, it was surprising to see the California Assembly introduce and pass A.B. 2269, the “Digital Financial Assets Law” earlier this year. This legislation failed to address any of the worthy goals set forth in the governor’s order.  The Chamber of Digital Commerce, submitted a comment letter to Governor Newsom’s office, outlining the counterproductive policies A.B. 2269 would put in place. You can read the full letter here.

Late Friday, Governor Newsom vetoed A.B. 2269 and returned it to the Assembly without his signature, stating it was premature and a more flexible regulatory approach is needed to keep pace with the industry’s rapidly evolving technology and use cases.  

We commend Governor Newsom for his action and share in his commitment to a California that encourages growth and has a clear, flexible regulatory environment that balances innovation and consumer protection.