On May 4, 2022, California Governor Gavin Newsom signed executive order N-9-22 regarding blockchain and crypto assets, with the objective to “spur responsible web3 innovation, grow jobs, and protect consumers.” According to the accompanying press release, the executive order “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.”
The executive order observes that “responsible innovation has been encumbered by regulatory uncertainty, especially with regard to federal law,” and, as such, “state agencies should work with, and concurrently to, the federal government to make California the first state to establish a comprehensive, thoughtful, and harmonized regulatory and business environment for crypto assets.” With these and other policy goals in mind, the executive order identifies seven interrelated 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.
- California state agencies must engage in a process concurrent with President Biden’s executive order on digital assets to collect feedback, 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.
- California state agencies must also collect input 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 companies based both in and outside California, disadvantaged communities, technical experts, venture capital firms, stakeholders interested in addressing inequities and environmental impact, and others.
- Engage in a public process to develop a comprehensive regulatory approach to crypto assets harmonized with the direction of federal regulations and guidance, creating consumer protections, with special attention to California’s state-chartered banks and credit unions.
- Engage in and encourage regulatory clarity via progress on the processes outlined in President Biden’s executive order, with state agencies coordinating closely with the Washington, DC 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 challenges identified by state agencies.
- Identify opportunities to create a research and workforce environment to power innovation in blockchain technology, including crypto assets. The goal will be to expose students to emerging opportunities, power emerging industries, and help ensure economic benefits are experienced equitably.