SACRAMENTO, Calif. — An executive order was signed by Gov. Gavin Newsom for state agencies to move in tandem for crafting regulations for digital currencies. Besides that, it also calls for officials to explore incorporating broader blockchain computer coding into the government operations of the state.
Evolving blockchain and cryptocurrency technology “is potentially an explosive creator of new companies and new jobs and new opportunities,” said Dee Dee Myers, a senior advisor to Newsom and director of the Governor’s Office of Business and Economic Development.
“So there are a lot of opportunities,” she said. “There’s also a lot of unknowns in the industry and so that’s another reason we want to engage early.”
Newsom’s order says California — home to Silicon Valley and financial innovators like PayPal PYPL, +2.22% and Square SQ, +4.36% — should be out front in figuring out how to adapt to new technologies.
“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,” Newsom, a Democrat, said in a statement.
Newsom said his order is a step toward making it the nation’s first state “to establish a comprehensive, thoughtful, and harmonized regulatory and business environment for crypto assets.”
Cryptocurrencies have exploded in popularity in recent years. About 16% of U.S. adults have invested in, used or traded cryptocurrencies and the percentage is exponentially higher among younger men. Biden’s executive order in part asks the Federal Reserve whether it should consider creating its own digital currency.
Blockchain provides the underlying transparency of a decentralized but publicly viewable ledger. The technology is also used to record other types of information, such as property records. The records are connected to many computers that together linked a global network so that no institution or person can control them.
California lawmakers are one of many who have offered related legislation. However a bill by Democratic Sen. Sydney Kamlager to allow California to accept cryptocurrencies for state services failed in its first committee this year and a similar bill by Republican Assemblyman Jordan Cunningham is held off.
Other states such as Arizona and Wyoming have been introduced with similar measures.
Newsom’s order says California should take the lead in figuring out how to adapt to the technological evolution despite the potential pitfalls of cryptocurrency.
In July 2020, his order was reported by the California Blockchain Working Group, which examined the risk and benefits of using blockchain.
A new Department of Financial Protection and Innovation was created with a goal of evaluating emerging risks and opportunities while protecting consumers.The department is called to develop guidelines for disclosures by companies as they offer financial products and services related to cryptocurrencies. Guidelines will also be provided for state-chartered banks and credit unions regarding crypto-related products.