Things are starting to look up for short-term home rental sharing company Airbnb.

San Francisco Mayor Ed Lee on Friday vetoed a bill that would have reduced annual limits on short-term rentals in the company's own backyard.

The San Francisco bill which would have placed a hard cap of 60 days annually for short-term rentals like Airbnb instead of the current 90-day limit, was approved Tuesday by the San Francisco Board of Supervisors but then vetoed by the mayor on the grounds that it would only worsen illegal renting in the city.

"This legislation will make registration and enforcement of our short-term rental regulations less effective and risks driving even more people to illegally rent units instead of complying with current regulations," said the mayor in a statement Thursday.

"We hope Airbnb, and our host community, will be included in the new working group. We remain committed to working with city leaders on solutions that protect housing and simplify the process to enable San Franciscans to share their homes," said David Owen, Public Policy Manager at Airbnb in a statement to TheStreet.

A 60-day hard cap would have cost 1,500 hosts in San Francisco $11 million in rental income per year, according to an analysis conducted by the Bay Area Council.

The veto comes after Airbnb and New York City buried the hatchet last Friday by dropping a lawsuit in which the company challenged the city's law to punish people who post short-term apartment listings on its site.

As Airbnb sets out to transform the travel industry, it has been assailed by challenges to grow and scale up. The company has been at the receiving end of regulatory pushback from local legislators in New York and San Francisco. Just last month, New York Governor Andrew Cuomo signed into law a bill that could impose up to $7500 of fines for people who list rentals of fewer than 30 days in multiunit buildings. Airbnb's own backyard San Francisco is also anticipated to place restrictions on the number of days out of a year that a unit could be rented.

Meanwhile, outside of its U.S. legal battles, Airbnb announced on Dec. 1 that starting in January it would automatically block hosts in London and Amsterdam from renting out entire homes for more than those cities' legal yearly limits unless they are licensed to do so, the Wall Street Journal reported. This agreement with European city governments marks the first time that Airbnb will enforce legal limits on its short-term rental listings and serves as an example to the rest of its business operations all over the world, according to James McClure, Airbnb's general manager for northern Europe.

Although plagued by regulatory obstacles that seem to threaten the company's expansion, Airbnb has proven its resilience by exploring new ventures and tackling regulatory challenges to challenge established vacation booking and hospitality companies like Expedia (EXPE) - Get Report , TripAdvisor (TRIP) - Get Report and Priceline (PCLN) . The company has been working on securing 700 tax agreements in cities that generate more than 90 percent of its revenue. Currently Airbnb has 200 existing tax agreements that allow the company to collect and remit hotel taxes to local governments, but CEO Brian Chesky told The Financial Times that he aims to boost the number by another 500.