By Jose Cruz Roa
Sacramento, CA – On May 4th, California Governor Gavin Newsom signed a blockchain executive order to spur responsible web3 innovation, grow jobs, and protect consumers. The new order will not be introducing any new regulations, but will task agencies with developing those future regulations. These regulations will be designed to accommodate the needs and perspectives of businesses and consumers throughout the state.
Crypto assets and blockchain technology have become a fast-growing industry. In November 2021, the industry had surpassed a three trillion dollar market cap, up from the 14 billion just five years before. This growth has led to increased venture capital-backed blockchain and crypto-asset companies.
According to PitchBook Data, about 16 percent of adults have invested in, traded, or used cryptocurrencies. As of April 22, late-stage post-money valuations for venture capital-backed blockchain and crypto-asset companies have increased on average 91 percent, more than three billion dollars.
This new executive order will allow the state of California to begin its process of creating a regulatory approach to spur responsible innovation while protecting the state’s consumers. In addition, it will assess how to deploy blockchain technology for state and public institutions, and build research and workforce development pathways to prepare the people of California for success within the industry. California Web3 businesses and consumers that rely on crypto assets or blockchain are expected to benefit from these changes.
Additionally, this new piece of legislation will build on President Biden’s recent actions to bring regulatory clarity to these emerging products and services.
Furthermore, the executive order set seven priorities that fall under four categories for the state. These categories include direction for rulemaking, regulation and coordination, education regarding Web3 uses and technology, and lastly voluntary reporting.
In addition, one of the seven priorities that are set for the state includes creating a transparent and consistent business environment for companies operating in the blockchain. This includes crypto-assets and related financial technologies that harmonize federal and California laws, allowing for the balance of benefits and risks to consumers and incorporating California values such as equity, inclusivity, and environmental protection.
A second priority incorporates collecting feedback from a broad range of stakeholders for potential blockchain applications and ventures, with a particular focus on 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 the state and more.
Another priority for the state involves exploring the opportunities to deploy blockchain technologies to address public-serving and emerging needs. This includes working with the community, private sector, and academia 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.
In terms of education, the goal of Newsom’s order is to educate students about these technologies and expose them to new opportunities that relate to Web3 innovation. Moreover, it also encourages the Governor’s Council for Postsecondary Education to search for opportunities for further research that involves blockchain technology and crypto-assets.
“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 Governor Newsom. “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.”
Under Newsom’s executive order, California is one of the first states that has recognized the importance of regulating the crypto industry. Other states that have already passed either through executive orders or through legislation include New Hampshire, New Jersey, Washington, Hawaii, and Arizona.