California Governor Gavin Newsom has signed a bill to regulate the state’s crypto sector, requiring digital asset companies to obtain licenses. The two crypto-related legislative measures seek to create a regulatory framework and strengthen data privacy protection for Californians.

The bill, passed by the state legislature in August 2023, necessitates compliance with licensing requirements for crypto firms, as well as reserve maintenance for asset-backed cryptocurrencies such as USDC and USDT. Additionally, the Delete Act requires data brokers to delete any personal data collected about an individual upon request.

The Crypto Council for Innovation raised concerns regarding the law, citing the stipulations for stablecoins and the absence of licensing waivers for smaller firms or entities already registered with the CFTC.

While the new regulation could reduce fraudulent activities and improve transparency, it could also increase operating costs and limit innovation.