As any expert in the space will tell you, this is a crucial time for the crypto industry. First, the sheer scale of the space is expanding beyond anything we could have imagined. The number of active crypto wallets is only increasing year on year, institutional and governmental recognition and support of cryptocurrencies are on the rise, and more money than ever is being spent on digital assets. As Ines S. Tavares writes, consumers are endlessly looking for new Binance listings to spend their money on, which goes across all sorts of token niches.
This development also means that there is a greater need for support and protection of crypto users. After all, those who invest in crypto face a myriad of risks across the board, and as the government gets more involved in the industry, protecting consumers will become a priority.
California seems to be leading the way in this regard as Democrat and Banking and Finance Committee chair Avelino Valencia made amendments to the Money Transmission Act, even having it renamed as the Digital Assets Act.
If this bill passes, it will legally reinforce the rights of Californians to store their crypto assets in self-custody as well as create a framework for the treatment of digital assets. For example, unclaimed crypto assets will have a legal foundation for proper treatment. It will also reinforce that the use of digital assets for private payments is legally recognized, and taxation/discriminatory treatment can’t be imposed on these transactions solely because of the use of digital assets.
This move has been widely lauded by industry stakeholders, with the Satoshi Action Fund noting that it will prevent discrimination.
“Once passed, this legislation will guarantee nearly 40 million Californians the right to self-custody their digital assets without fear of discrimination,” the group said in a public statement.
Interestingly, one of the provisions of the bill is that public officeholders will be restricted from issuing or promoting digital assets. This is a very timely development as there has been some scandal around President Donald Trump and First Lady Melania Trump’s meme coins, which were released earlier this year. The meme coins made millions of dollars for the Trump family after being heavily backed by their supporters, but they went on to decline in the market. Many have criticized the meme coins as exploitative, with the ethics of a public office holder dabbling in the crypto market even brought into question. But with this bill, it will be firmly decided that they cannot put forward their own cryptocurrencies or promote existing ones.
Given the growing intersection between the crypto space and politics, this sort of bill will be relevant in the next few years especially. Currently, it is awaiting its first reading and is one of many crypto-related regulations being reviewed around the country.
Some recent wins for the industry include the executive order by President Trump to establish a strategic Bitcoin reserve and the similar decision being made in Texas. In California, a bill was introduced a few months ago that would better define the legal limits of stablecoins, including collateral and liquidation.
All these bills being passed at this time is no coincidence as not only is the industry bigger than ever, but the political implications of it are more significant. For example, more crypto use, both institutionally and individually, means more tax for the government to collect. Perhaps the industry could have been ignored regulation-wise when the government had less financial benefit from it, but now, things are being taken more seriously. This is only compounded by the fact that government-backed pension funds are investing in cryptocurrency and the like.
We also have to consider the geopolitical implications, as we’ve seen with North Korea. It’s been widely reported that the country sponsors a hacking group that steals cryptocurrency from exchanges in a bid to fund its nuclear work on this project.
This means, ultimately, that cryptocurrency has to be better regulated than ever, and if the industry is going to reach its full potential, there needs to be proper frameworks in place. California is leading the charge in this regard, which comes as no surprise given that some of the biggest companies in the crypto space, such as Ripple Labs and Solana, are based in the state. The immediate benefits and implications are felt by California, thus a big push on its end.
Protecting the right of crypto users to self-custody is a major building block in securing the future of cryptocurrency in California. Should this bill pass and become a reality, it can act as a foundation for other states to follow suit. In that case, crypto users all over America and beyond can enjoy the best experience possible.
Subscribe to get the latest posts sent to your email.