The bill was proposed by Assemblyman Timothy Grayson (D-Concord), who is a member of the Consumer Federation of California, in an effort to shield Californians from financial hardship and promote ethical innovation in the cryptocurrency sector.
As we now know, the costs of weak regulation are far higher since actual people are suffering harm.
defending Californians against fraud and scams
The market’s dishonest participants have interfered with its progress by engaging in illegal activities like insider trading and other unethical practices.
Although cryptocurrency has grown significantly in recent years, these unfavorable actions have slowed down its development.
Cryptocurrency scams, which result in billions of dollars in losses each year, directly harm consumers by creating a sense of financial instability and a lack of confidence.
The Department of Financial Protection and Innovation (DFPI) would have the power to issue licenses to businesses that deal in digital financial assets under Assembly Bill 39 (AB 39).
The Consumer Federation of California’s Executive Director, Robert Herrell, endorsed the proposal and praised Grayson for spearheading the effort to license bitcoin businesses and establish essential consumer safeguards.
He also added that the scams and bankruptcies that had place over the course of the previous year only served to emphasize the necessity of consumer protections in the bitcoin sector.
The frauds and bankruptcies of the previous year have only increased our interest as a group in establishing fundamental consumer safeguards in this sector, which has up until now resembled the Wild West in terms of the “anything goes” conduct of major participants in the bitcoin business.
What’s next?
AB 39 creates a licensing procedure, DFPI enforcement mechanisms, stablecoin guidelines, requires crypto exchanges to self-certify that a listed token complies with certain requirements, guarantees that consumers have access to basic customer support like a toll-free number, and offers a way for businesses with a New York State BitLicense to be conditionally licensed right away.
Following the veto of AB 2269, discussions with business stakeholders, subject matter experts, and consumer advocates resulted in the provisions of AB 39. (Grayson, 2022).
Principal coauthors of AB 39 include Assemblymember Cottie Petrie-Norris, a woman of the Assembly Committee on Banking and Finance, and Senator Monique Limón, chair of the Senate Democratic Caucus and chair of the Senate Committee on Banking and Financial Institutions.
A hearing on AB 39 has been assigned to the Assembly Banking and Finance Committee, and fresh, revised text will be made available soon.
In an ideal world, the law will prohibit the pervasive financial fraud and fraudulent behaviors that are common in the bitcoin space by striking a balance between consumer protection and industry compliance.