Governor Issues Order: Regulatory Framework for Blockchain & Crypto

Governor's podium

California Gov. Gavin Newsom has signed an executive order for the state to begin the process of creating a regulatory approach for blockchain, cryptocurrency, and web3 technologies to “spur responsible innovation while protecting California consumers.”

The California Credit Union League is still reviewing the executive order and will provide further information and analysis in the near future.

Newsom’s executive order comes as President Joe Biden recently announced an executive order on ensuring responsible development of digital assets for a coherent and cohesive regulatory framework with respect to blockchain and cryptocurrency activity — hopefully harmonizing state regulations with forthcoming federal rules and guidelines.

However, Newsom’s order is pursuant to the California Consumer Financial Protection Law passed by the state legislature in 2020.

Newsom’s office says the order will foster responsible innovation, bolster California’s innovation economy, protect consumers, assess how to deploy blockchain technology for state and public institutions, and build research and workforce development pathways to prepare Californians for success in the industry.

“It aims to create a transparent regulatory and business environment for web3 companies which harmonizes federal and California approaches, balances the benefits and risks to consumers, and incorporates California values such as equity, inclusivity, and environmental protection,” a news release states.

Under Newsom’s executive order, California has seven priorities:

  • 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.
  • Collect feedback from a broad range of stakeholders, create a regulatory approach to crypto assets harmonized between federal and state authorities, explore and establish public-serving use cases (such as incorporating blockchain technologies into state operations), and build research and workforce pipelines.
  • Collect feedback from a broad range of stakeholders for potential blockchain applications and ventures, with particular attention to crypto assets and related financial technologies. Engagement should include technical experts, stakeholders interested in addressing inequities and environmental impact, companies both based in and outside California, and more.
  • Engage in a public process and exercise statutory authority to develop a comprehensive regulatory approach to crypto assets harmonized with the direction of federal regulations and guidance, creating consumer protections and solidifying California’s status as the premiere global location for responsible crypto asset companies to start and grow.
  • Engage in and encourage regulatory clarity via progress on the processes outlined in the federal executive order, with state agencies coordinating closely with the Washington, D.C. Office of the California Governor.
  • Explore opportunities to deploy blockchain technologies to address public-serving and emerging needs, working with the private sector, academia, and community to present pilots for innovative policies, programs, and solutions that demonstrate and showcase the potential of adopting blockchain technologies to respond to specific challenges identified by state agencies.
  • Identify opportunities to create a research and workforce environment to power innovation in blockchain technology, including crypto assets. The goals will be to expose students to emerging opportunities, power emerging industries, and help ensure economic benefits are experienced equitably.

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