On Could 4, 2022, California Gov. Gavin Newsom signed Executive Order N-9-22 (EO) to create a regulatory strategy for cryptocurrency corporations and to find out learn how to use blockchain expertise for state and public establishments. Via the EO, California is changing into a frontrunner in growing new guidelines of the street 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 businesses 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 surroundings for crypto belongings.”
Beneath the EO, the state has seven priorities:
Create a clear and constant enterprise surroundings for corporations 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.
Gather suggestions from a broad vary of stakeholders, create a regulatory strategy 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.
Gather suggestions from a broad vary of stakeholders for potential blockchain functions and ventures, with explicit consideration to crypto belongings and associated monetary applied sciences. Engagement ought to embrace technical consultants, stakeholders interested by addressing inequities and environmental affect, corporations 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 strategy to crypto belongings harmonized with the path of federal laws and steerage, creating client protections and solidifying California’s standing because the premiere world location for accountable crypto asset corporations 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 businesses coordinating intently with the Washington, D.C. workplace of the California governor.
Discover alternatives to deploy blockchain applied sciences to deal with public-serving and rising wants, working with the non-public sector, academia, and group to current pilots for progressive insurance policies, applications, and options that display and showcase the potential of adopting blockchain applied sciences to answer particular challenges recognized by state businesses.
Establish alternatives to create a analysis and workforce surroundings to encourage innovation in blockchain expertise, together with crypto belongings. The objectives can be to show college students to rising alternatives, energy rising industries, and assist guarantee financial advantages are skilled equitably.
California state businesses, 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 corporations and customers, at the side of federal businesses 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 initiatives like implementing good contracts and inspiring sustainability via its state Blockchain Working Group and Go-BIZ financial growth initiatives. The state might also facilitate and encourage the usage of varied blockchain applied sciences by state businesses by way of procurements with vendor corporations.
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 research 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 move this session, however they do sign the altering views on integrating cryptocurrency and blockchain expertise into California society.
©2022 Greenberg Traurig, LLP. All rights reserved. Nationwide Regulation Evaluation, Quantity XII, Quantity 131