Reports show Governor Gavin Newsom of California approved a measure requiring licensing of crypto businesses, with implementation scheduled for July 2025.
The Digital Financial Assets Law, widely viewed as California’s response to New York’s “BitLicense,” was enacted by the Assembly of that U.S. state despite widespread opposition from the industry in September 2022.
The State of California’s Department of Financial Protection and Innovation (DFPI) must draft crypto regulations in accordance with state law. The regulatory structure includes a licensing system and grants the government regulation and enforcement authority over the industry. The letter further stated that the DFPI would be given an implementation period of 18 months to allow for careful tailoring of the proposed regulatory framework to reflect industry changes and minimize consumer harm.
Some say this is an unwarranted expansion of the state’s authority. Bitcoin’s entire value proposition as a replacement for fiat centrally issued currencies is that it doesn’t need to be governed by any central bank or other governing body. Instead, it operates autonomously, much to the chagrin of government micromanagers who see an opportunity to rein in their own power in such measures.
Bitcoin’s ‘proof of concept’ was published in 2008 by Satoshi Nakamoto. He claimed that a central intermediary makes digital wealth transfer inefficient. An alternative approach based on cryptographic evidence rather than trust allowed direct peer-to-peer transactions without double expenditure to alleviate this inefficiency. Bitcoin has grown exponentially among users skeptical of state monetary regulation since then. No government, business, or bank manages Bitcoin.
Every exchange of Bitcoin via public addresses is recorded in the public ledger. For this and other reasons, it cannot be manipulated in the same way that fiat currencies produced by governments can.
Bitcoin, however, poses a threat since the ability to manipulate the money supply is crucial to maintaining the current currency system.
Cryptocurrency specialists say that people living in authoritarian regimes may benefit from using Bitcoin because of the currency’s decentralized nature and independence from any central authority.
On the TV show “Just the News, Not Noise,” Natalie Smolenski, Texas Bitcoin Foundation’s executive director, explained that Bitcoin was freedom money.
She explained that unlike currencies issued by governments, Bitcoin is “mined” by computers.
The issue with conventional currencies is that they are all subject to political influence. Countries can now have their reserves frozen and taken if held in another government’s currency.