The article is below in its entirety. I have to say I am a little surprised that Cali was doing this. There are a number of high-profile California Democrats who are very, very against crypto currently, with Rep. Brad Sherman and Rep. Maxine Waters being two of the bigger heavyweights in the House.

Assemblymember Valencia might be cut from the Rep. Richie Torres role instead, and someone who has realized that the Democrats have lagged behind what the general population feels when it comes to crypto. In his statement on pulling the legislation, he highlighted how California continues to lag behind other states in emerging industries like crypto. His bill faced significant headwinds from the normal parties like banks and credit unions and Assemblymembers in his own party.

The bill would have overridden state finance regulators’ pending cease-and-desist order against Coinbase.
By Tyler Katzenberger | 06/29/2026 04:25 PM EDT
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SACRAMENTO, California — A California Democrat’s controversial bill to legalize a type of cryptocurrency investor rewards known as “staking” is all but dead for this year after being jettisoned from committee hearings this week, two people with knowledge of the legislation’s status told POLITICO on Monday.

What happened: The two people, granted anonymity because they were not authorized to speak publicly, confirmed that Democratic Assemblymember Avelino Valencia’s AB 2285 was pulled from scheduled hearings in the Senate Judiciary and Senate Banking and Finance committees, ahead of a Friday deadline for bills to pass certain policy committees. That means the bill likely won’t make it to the governor’s desk in 2026.

Valencia confirmed in a statement to POLITICO that his bill is not moving forward, citing a need for “greater education and understanding” on crypto policy in California.

“As a younger legislator, my observation has been that modernization and change are difficult, often slowed by a reluctance to rethink how we approach emerging industries," Valencia said. "I am disappointed that California continues to trail other states because of it."

Why it matters: The measure would allow crypto companies to offer staking — where users hold certain amounts of currency in their digital wallets to earn lucrative rewards — without following traditional California securities regulations. Earnings from crypto staking often exceed interest rates for traditional savings accounts, and Valencia has argued that legalizing the practice would ultimately benefit consumers.

But a coalition of banks, credit unions and consumer advocacy groups oppose the measure, insisting the proposal would give crypto companies too much regulatory leniency without disclosing investment risks to customers. Opponents also warn it would encourage consumers to pull their money out of traditional savings accounts, leaving institutions with limited capacity to finance business and housing loans.

One of Valencia’s fellow Democrats, Assemblymember Pilar Schiavo, echoed those concerns earlier this month as she voted against his bill on the Assembly floor.

Key context: By legalizing crypto staking, Valencia’s bill would have effectively voided an ongoing California Department of Financial Protection and Innovation cease-and-desist order from 2023 that’s blocking Coinbase from offering staking rewards in the Golden State.

Valencia’s measure also mirrors a federal debate over the CLARITY Act, a bill that proposes nationwide rules for the crypto sector and is similarly pitting banks and consumer groups against crypto firms.

What’s next: Valencia has until Friday to reschedule his bill for committee hearings, but that is unlikely to happen on such a short timeline. It’s far more likely that Valencia, who is running for state Senate, will have to wait until the new legislative session begins in 2027 for another attempt at legalizing crypto staking.