California is one step closer to joining New York in requiring cryptocurrency licenses.

Governor Gavin Newsom has until September 30 to sign or veto the Digital Financial Assets Law, which would go into effect in 2025. The bill requires companies offering services that involve investing, lending, or trading cryptocurrencies to register with the state’s Department of Financial Protection and Innovation.

Proponents of the bill call it balanced and claim it establishes responsible guardrails to protect consumers, while detractors argue it produces an onerous process that will drive crypto businesses from the state – an important issue given that California is home to some notable crypto players, including Coinbase and Ripple.

Neither the licensure requirements nor the related concern and criticism are new: New York’s BitLicense regime went into effect in 2015 (the first such license was issued that year), despite criticism of over-regulation and an unduly burdensome application process. Indeed, some companies purportedly left and/or limited their services in New York as a result of the law, though New York’s Department of Financial Services has approved 31 credentials, including companies such as Robinhood, Block and Gemini.

California’s struggle with digital asset regulation now moves to the governor’s office. For now, the Governor has not indicated what he plans to do with the bill, but his decision will have meaningfully impact the digital asset industry, in particular given California’s position as a tech hub.