California Governor Gavin Newsom vetoed Bill 2269 proposed by state Congressman Tim Grayson on the grounds that a more flexible approach is needed to address crypto regulations.

The bill is originally billed to impress virtual currency service providers to obtain a license before they start operating in the state. The bill seeks to establish California as a state that issues BitLicense just like New York.

“It is premature to block a licensing structure,” Newsom wrote in a recent letter to the California State Assembly. “A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases and adapt with the right tools to address trends and mitigate consumer harm.”

Governor Newsom was also concerned about the financial implications of implementing the bill, which he said the state was not ready for at this time.

According to him, introducing a new regulatory approach is “an expensive undertaking, and this bill would require a general fund loan of tens of millions of dollars during the first few years. Such a significant commitment of general fund resources must be considered and accounted for in the annual budget process.”

California is one of the most progressive states in the United States when it comes to developments related to cryptocurrencies. With the rise in the level of digital currency adoption in the state, Governor Newsom warned crypto users about the high rate of scams in the ecosystem in March 2020.

From Governor Newsom issuing an Executive Order to establish crypto regulations to introducing a crypto bill to measure the impact of digital assets on consumers. With the veto placed on Grayson’s bill, lawmakers will have to go back to the drawing board and heed the advice of the governor, who advocates an alternative approach to handling crypto at this time.

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