California Governor Gavin Newsom has been a highly controversial figure ever since taking the highest political office in California. He's made numerous decisions that have caused severe outrage, and failed to focus on problems like poverty.
Though, despite Governor Newsom's flaws, he has been productive in a few areas. To many crypto advocates' surprise, Newsom vetoed a crypto bill similar to New York's BitLicense Bill today, preventing increased crypto regulation from passing in California. The bill does not differentiate between Bitcoin and altcoins, meaning every cryptocurrency would have been affected.
The bill had overwhelming support from Newsom's party, so this was a highly unexpected development. In a letter, Newsom stated about the new bill:
"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."
Usually, top politicians go by party lines on major issues to avoid the potential fallout in primary elections. The bill, titled AB-2269, aimed to require new crypto businesses to register a license with the state, among other requisites like a 24/7 call center.
The bill's approach stifles creativity, as the cost of complying with these types of regulations often drives new businesses away to other states with friendlier laws.
Newsom splits with his party in favor of crypto
Democrats have often been some of the most outspoken critics of the cryptocurrency industry in the United States. Extremists like Elizabeth Warren have made it no secret that they despise the industry and want it to be highly regulated. While there are some democrats like Senator Ron Wyden who support the industry, the vast majority are against the ideals of crypto, whereas most Republicans are bullish on the industry.
Gavin Newsom is arguably extreme on many issues, but it's clear he genuinely supports the crypto industry as opposed to many of his colleagues. In order for Newsom to have made this decision, he must've realized that the repercussions of the new bill would crush his state's ability to compete with others regarding crypto.
The goal of any elected official should be to drive innovation, or else, the underlying state may face a brain drain. California is home to Silicon Valley, where some of the world's biggest tech companies have headquarters.
As California Governor, keeping Silicon Valley alive is a top priority, since it drives incredible amounts of innovation and revenue to the state. As an emerging technology, crypto is already part of Silicon Valley through companies like MakerDAO.
Newsom is not against crypto regulation, but he wants it accomplished in a fair way which doesn't drive innovation away from his state. Instead of this new bill, Newsom favors Executive Order N-9-22, which he signed in May, and he argues, achieves the same goals as the new bill.
It's hard not to agree with him. Executive Order N-9-22 provides a rough framework for regulating the crypto industry, but with no hidden parts that stop companies from doing business in the state.
Newsom recognizes that crypto will be a staple of the World Wide Web in the coming future. Bitcoin and Ethereum are highly popular in California, with them topping all other US states in Google searches recently. It's important that California lawmakers support the industry, so that the US as a whole can lead other countries. Gavin Newsom has made a great first step in achieving this goal. Hopefully, his party will follow.