Governor Gavin Newsom this week touted California as being the first U.S. state to create a comprehensive regulatory framework for blockchain technologies and crypto digital assets, according to a press release.
Newsom signed an executive order on May 4 on cryptocurrencies which he said will “create a transparent regulatory and business environment for Web 3 companies” in the golden state.
The order is designed to “create a transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values, such as equity, inclusivity, and environmental protection.”
“California is a global hub of innovation, and we’re setting up the state for success with this emerging technology—spurring responsible innovation, protecting consumers, and leveraging this technology for the public good,” said Newsom.
Crypto assets and blockchain technology have increasingly become more popular in recent years with countries such as El Salvador, Venezuela, and the most recently the Central African Republic embracing digital currencies as legal tender.
It surpassed a $3 trillion market cap last November, up from $14 billion just five years prior, while roughly 16 percent of adults have invested in, traded, or used cryptocurrencies, according to a November Pew Research Center survey.
Newsom praised the order as a step forward for California, home to Silicon Valley, placing it at the fore of technological advancements.
“Too often government lags behind technological advancements, so we’re getting ahead of the curve on this, laying the foundation to allow for consumers and business to thrive.”
Specifically under the order, and pursuant to the California Consumer Financial Protection Law passed by the Legislature in 2020, the state will create a “transparent and consistent business environment” for companies operating in blockchain, including crypto-assets and related financial technologies.
This environment will “harmonize federal and California laws,” and balance the benefits and risks to consumers, among others things, Newsom said.
The state will also collect stakeholder feedback to create regulations for crypto assets that are “harmonized” between federal and state authorities, look into using blockchain technologies for state and public institutions, and explore the potential to use blockchain technologies to address the needs of the public and emerging needs.
California will also collect stakeholder feedback regarding potential blockchain applications and ventures.
It will also encourage regulatory clarity via close coordination with state agencies and the Washington, D.C. Office of the California Governor based on the federal executive order that President Joe Biden signed in March ensuring responsible development of digital assets.
Finally, Newsom’s order will identify ways in which students can be exposed to emerging opportunities via research into power innovation in blockchain technology, the latter of which Newsom touted as a way to help ensure that “economic benefits are experienced equitably.”
While California may be the first state to attempt to develop a comprehensive approach to blockchain technologies and crypto digital assets, it is not the first to move towards making crypto more mainstream.
Ohio began accepting virtual currency payments for government services in 2018 via OhioCrypto.com but the program was later scrapped due to limited use.