Stablecoin controversy coupled with erosion in some dubious cryptocurrencies are among the factors prompting increasing regulatory scrutiny of digital assets in 2022 and are perhaps among the reasons why the Securities and Exchange Commission (SEC) continues delaying the approval of a physically-backed bitcoin exchange traded fund.
Add that all up, and it’s not a stretch to say ETFs such as the VanEck Digital Assets Mining ETF (DAM ) and the VanEck Digital Transformation ETF (DAPP ) could go for some favorable regulatory news. Perhaps surprisingly, California may be the state delivering it.
Amid other broader market and crypto-specific issues and due in part to the state’s lengthy legislative agenda, it flew under the radar, but policymakers in California proposed a bill that would have bolstered regulations on the crypto industry while potentially crimping innovation. Last week, Gov. Gavin Newsom (D-CA) vetoed the legislation.
“The bill had flown under the radar until it passed both houses of California’s legislature with near-unanimous support. If it had become law, the bill would have brought many regulations to the crypto industry that consumer advocates had long sought — including a requirement that trading platforms seek the best price when executing trades for customers. Such changes could have transformed the digital-asset market not just in California, but nationally if firms modified their businesses to comply with the state’s law,” reports Joe Light for Barron’s.
Newsom’s veto can be seen as a positive for the broader crypto industry and possibly for ETFs such as DAM and DAPP, too. Still, it might take a while for the good news to fully matriculate to the equity and ETF levels.
The reason being is that Newsom’s veto can be overridden by members of his party because California, as of November 2021, is one of the states that has veto-proof majorities in the state assembly and senate. It remains to be seen whether or not California lawmakers push the issue and override the governor’s veto. In what could potentially be a positive for DAM and DAPP, overriding the veto may not be a top priority in an election year. Newsom appears to favor flexibility when it comes to regulating the crypto industry.
“A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases and is tailored with the proper tools to address trends and mitigate consumer harm,” Newsom wrote in a letter discussing the veto.
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