The governor of California – the home state of cities including San Francisco and Los Angeles, as well as world-famous technology hotspot Silicon Valley – has issued an executive order to ‘spur responsible web3 innovation’ for the public good.
Gavin Newsom signed an order setting out seven priorities, as well as plans for the California Government Operations Agency (GovOps) to ‘explore opportunities to deploy blockchain technologies to address public-serving and emerging needs’.
In issuing the executive order, the West Coast state – which, with a population of more than 39 million is the most populous in the US – becomes ‘the first state in the nation to begin creating a comprehensive and harmonised framework for responsible web3 technology to thrive’, the Office of the Governor of California’s announcement asserts.
“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 in a press release issued from state capital Sacramento.
“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,” he said.
California ‘building on’ White House’s move
California’s executive order comes a couple of months after the White House issued its own executive order setting out a cross-government digital assets strategy.
President Joe Biden signed the order on ‘ensuring responsible innovation in digital assets’ – described as the US’s first ‘whole-of-government strategy to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology’ – on 9 March. The order outlined a national policy for digital assets across six priorities: consumer and investor protection; financial stability; illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
California’s executive order references the White House’s move, stating that its own plan ‘builds on President Biden’s recent actions to bring regulatory clarity to these emerging products and services’, adding that it ‘sets California on a path to harmonise with forthcoming federal rules and guidelines, to create regulatory clarity for businesses and protect consumers.’
Around 16 per cent of adults in the US have invested in, traded or used cryptocurrencies, according to the White House’s announcement, and a growing number of political leaders have been cheerleading for the crypto sector across the country.
New York City’s mayor, Eric Adams, for example made headlines by announcing that he would be receiving his first three monthly pay-packets in Bitcoin after being elected in January. The governor of Colorado, Jared Polis, meanwhile has announced that his state – which has a population of almost six million – plans to accept cryptocurrency payment for taxes starting this summer. Polis just this week also announced that his re-election campaign would be ‘the first Democratic gubernatorial campaign to accept donations in the form of cryptocurrency’.
California’s seven blockchain priorities
Under the five-page California executive blockchain order, the state has seven priorities.
The first is to create a ‘transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonises federal and California laws, balances the benefits and risks to consumers, and incorporates California values such as equity, inclusivity and environmental protection’.
The second is includes creating a regulatory approach to crypto assets harmonised between federal and state authorities, exploring and establishing public-serving use cases – such as incorporating blockchain technologies into state operations – and building ‘research and workforce pipelines’.
The third is to obtain feedback for potential blockchain applications and ventures, ‘with particular attention to crypto assets and related financial technologies’.
The fourth is to ‘engage in a public process’ and exercise statutory authority to develop a comprehensive regulatory approach to crypto assets harmonised with the direction of federal regulations and guidance, creating consumer protections and ‘solidifying’ California’s status as a popular location for crypto companies.
Fifth is ‘engaging in and encouraging regulatory clarity’ via progress on the processes outlined in the federal executive order.
Sixth is ‘exploring 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, programmes and solutions that demonstrate and showcase the potential of adopting blockchain technologies to respond to specific challenges identified by state agencies.
The seventh priority is to ‘identify opportunities to create a research and workforce environment to power innovation in blockchain technology, including crypto assets’ – more specifically, ‘exposing students to emerging opportunities, power emerging industries and help ensure economic benefits are experienced equitably’.
GovOps to request ‘innovative ideas’
The California Blockchain Working Group examined uses, risks, benefits, legal implications and best practice related to blockchain a couple of years ago, issuing a 179-page report ‘Blockchain in California: A Roadmap’.
Next steps include GovOps picking up the baton on potential deployment of blockchain technologies.
GovOps – which oversees 10 different state departments, boards and programmes including the California Department of Technology and California Department of Tax & Fee Administration – is to ‘issue a request for innovative ideas… to the private sector, academia and community, to present pilots for innovative policies, programmes and solutions that demonstrate and showcase the potential of adopting blockchain technologies to respond to specific challenges identified by state agencies to address the considerations for appropriate application identified by the California Blockchain Working Group.’
The state created a Department of Financial Protection & Innovation two years ago from the former Department of Business Oversight.
FURTHER READING
‘White House sets out cross-government digital assets strategy’ – our news story (11 March 2022) on Joe Biden signing the order on ‘ensuring responsible innovation in digital assets’
‘US DoJ appoints digital assets prosecutor to head crypto crimes team’ – our news story (28 February 2022) on the appointment of Eun Young Choi as inaugural director of the Department of Justice’s newly created National Cryptocurrency Enforcement Team
‘Federal Reserve CBDC consultation paper asks 22 questions’ – our news story (21 January 2022) on the Fed’s release of a 40-page document, ‘Money and Payments: the US Dollar in the Age of Digital Transformation’, exploring the possibility of a US central bank digital currency (CBDC)
