On Might 4, 2022, California Gov. Gavin Newsom signed Executive Order N-9-22 (EO) to create a regulatory method for cryptocurrency firms and to find out the way to use blockchain expertise for state and public establishments. By means of the EO, California is turning into a pacesetter in creating new guidelines of the highway for rising digital currencies and associated crypto applied sciences.
The EO observes that “accountable innovation has been encumbered by regulatory uncertainty, particularly with regard to federal legislation,” and, as such, “state companies ought to work with, and concurrently to, the federal authorities to make California the primary state to determine a complete, considerate, and harmonized regulatory and enterprise atmosphere for crypto belongings.”
Below the EO, the state has seven priorities:
Create a clear and constant enterprise atmosphere for firms working in blockchain, together with crypto belongings and associated monetary applied sciences, that harmonizes federal and California legal guidelines, balances the advantages and dangers to customers, and incorporates California values akin to fairness, inclusivity, and environmental safety.
Accumulate suggestions from a broad vary of stakeholders, create a regulatory method to crypto belongings harmonized between federal and state authorities, discover and set up public-serving use circumstances (akin to incorporating blockchain applied sciences into state operations), and construct analysis and workforce pipelines.
Accumulate suggestions from a broad vary of stakeholders for potential blockchain purposes and ventures, with specific consideration to crypto belongings and associated monetary applied sciences. Engagement ought to embrace technical specialists, stakeholders desirous about addressing inequities and environmental influence, firms based mostly each in and outdoors California, and extra.
Have interaction in a public course of and train statutory authority to develop a complete regulatory method to crypto belongings harmonized with the route of federal laws and steerage, creating shopper protections and solidifying California’s standing because the premiere international location for accountable crypto asset firms to start out and develop.
Have interaction in and encourage regulatory readability by way of progress on the processes outlined within the federal executive order, with state companies coordinating carefully with the Washington, D.C. workplace of the California governor.
Discover alternatives to deploy blockchain applied sciences to handle public-serving and rising wants, working with the non-public sector, academia, and group to current pilots for progressive insurance policies, packages, and options that reveal and showcase the potential of adopting blockchain applied sciences to answer particular challenges recognized by state companies.
Establish alternatives to create a analysis and workforce atmosphere to encourage innovation in blockchain expertise, together with crypto belongings. The objectives will likely be to reveal college students to rising alternatives, energy rising industries, and assist guarantee financial advantages are skilled equitably.
California state companies, together with the Division of Monetary Innovation and Safety (DFPI) as specified within the EO, will doubtless be on the forefront of proposing and implementing new regulatory constructions for firms and customers, together with federal companies such because the CFPB, CFTC, and SEC. Pursuant to the phrases of the governor’s EO, California might also search to foster additional blockchain innovation for tasks like implementing sensible contracts and inspiring sustainability by means of its state Blockchain Working Group and Go-BIZ financial improvement initiatives. The state might also facilitate and encourage using numerous blockchain applied sciences by state companies by way of procurements with vendor firms.
Specifically, the EO requires DFPI and Go-BIZ to interact with and collect enter from stakeholders inside 30 days (within the case of DFPI) and instructs DFPI to ramp up its enforcement actions pursuant to the California Shopper Monetary Safety Regulation (CCFPL). The mandate for elevated enforcement signifies that regulation by enforcement of crypto-asset-related monetary services and products will stay a key technique because the EO’s mandate for cautious examine and considerate crypto-asset-related regulation develops.
As well as, a pair of payments within the California State Legislature would make cryptocurrency authorized tender for presidency providers. Each payments have been met with resistance and will not cross this session, however they do sign the altering views on integrating cryptocurrency and blockchain expertise into California society.
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