California governor signs landmark executive order on digital assets

California is going big on embracing the digital currency industry. Governor Gavin Newsom has signed an executive order on digital currencies and blockchain technology that mandates agencies to look into how the state can both adopt and regulate the emerging technology. 

Under the order named “Executive Order N-9-22,” the state hopes to incorporate its core values into creating a regulatory regime that is friendly to digital currency firms and protects consumers maximally. The order reads:

“It shall be the goal of the State to 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.”

The involved agencies include the governor’s Office of Business and Economic Development (OBED) which will work with the state’s Business, Consumer Services and Housing Agency (BCSH), and the Department of Financial Protection and Innovation (DFPI). 

The DFPI will be in charge of creating the state’s regulatory approach and exploring possible areas where blockchain technology can be deployed. The order also named the Governor’s Council for Postsecondary Education to be responsible for identifying research and workforce pipelining opportunities in the industry. 

In an official statement, Newsom revealed that with the move, California has become the first state to “begin creating a comprehensive and harmonized framework for responsible web 3 technology to thrive.” 

He also noted that the motivation behind the order is the recently signed Presidential Executive Order on Blockchain. Hence, the state agencies have to also work with the federal timeline in getting feedback from the industry and providing their recommendations.

“We’re getting ahead of the curve on this,” Newsom said.

California, considered to be the state with the biggest economy in the United States, has long been open to the digital currency industry. From as far back as 2018, the state passed temporary legislation that recognized the use of smart contracts and blockchain technology in keeping public records. It later made the legislation permanent in 2021. This openness to the industry has seen the state flooded with a lot of digital currency startups.

Dee Dee Myers, a senior advisor to Newsom and director of the Governor’s Office of Business and Economic Development, told CNBC that California is home to about a quarter of the 800 blockchain businesses in North America. 

Governor Newsom also acknowledged this stating that the state is a global hub of innovation. The executive order is intended to keep it that way and keep California ahead of the curve. He said: 

“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.”

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