California Governor Gavin Newsom (D) vetoed a crypto licensing and regulation bill seen as a possible West Coast version of New York’s “BitLicense” on Friday.

Assembly Bill 2269, sponsored by Assemblymember Tim Grayson (D), would have created a licensing regime for anyone hoping to facilitate crypto transactions, likening it to how money transmissions are currently overseen by the Money Transmission Act. It was one of eight bills Newsom vetoed Friday, He signed 21 other bills, addressing issues ranging from crossing signals to cybersecurity to infrastructure concerns.

“On May 4, 2022, I issued Executive Order N-9-22 to position California as the first state to establish a transparent regulatory environment that both fosters responsible innovation, and protects consumers who use digital asset financial services and products – all within the context of a rapidly evolving federal regulatory picture,” Newsom wrote in a message explaining his veto. “Over the last several months, my Administration has conducted extensive research and outreach to gather input on approaches that balance the benefits and risk to consumers, harmonize with federal rules, and incorporate California values such as equity, inclusivity, and environmental protection.”

It would be “premature” to create a licensing regime without considering feedback from this executive order, Newsom wrote. He also pointed to the possibility of future federal legislation or regulations.

The California assembly passed the bill last month. If it had been signed into law, it would have required California-licensed entities to only interact with stablecoins issued by banks or otherwise licensed by the state Department of Financial Protection and Innovation (the ban would have been phased out by 2028); forced stablecoin issuers to remain fully backed by reserves (at least an amount equivalent to the number of stablecoins in circulation); and set up a licensing and examination regime for crypto companies.

“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 his letter.

Newsome also noted that the new licensing and regulatory regime would require a multimillion dollar loan, which has not been accounted for in California’s annual budget process.

“I am committed to working collaboratively with the Legislature to achieve the appropriate regulatory clarity once federal regulations come into sharper focus for digital financial assets, while ensuring California remains a competitive place for companies to invest and innovate,” he concluded.

In a tweet, Grayson said he would “continue to work to protect California’s consumers,” noting that the Assembly had “overwhelmingly” voted in favor of the bill, which received 71 yes votes, zero no votes and nine abstentions.

“The cryptocurrency market is under-regulated at best and deliberately rigged against everyday consumers at worst,” he said. “A financial market cannot be considered healthy if there are no guardrails in place to protect consumers from scams and bad actors.”