California Executive Order Establishes State Regulatory Framework for Blockchain and Crypto-Related Assets | Practical Law

California Executive Order Establishes State Regulatory Framework for Blockchain and Crypto-Related Assets | Practical Law

The governor of California issued an executive order that provides guidance and directives for establishing a framework of digital asset and financial technology regulation and enforcement in the state.

California Executive Order Establishes State Regulatory Framework for Blockchain and Crypto-Related Assets

by Practical Law Finance
Published on 20 May 2022USA (National/Federal)
The governor of California issued an executive order that provides guidance and directives for establishing a framework of digital asset and financial technology regulation and enforcement in the state.
On May 4, 2022, California governor Gavin Newsom issued an executive order that provides guidance and directives for establishing a framework of digital asset and financial technology regulation in the state. The order was issued to begin to take necessary steps toward a comprehensive regulatory approach to blockchain and crypto assets in the state that is harmonized with the direction of federal regulations and guidance. It also calls on the state to examine ways of potentially using blockchain solutions and digital assets in state operations.
The order focuses on several aspects of blockchain, including its potential applications in the private and public sector. It calls upon state agencies such as the Governor's Office of Business and Economic Development, the Business, Consumer Services and Housing Agency, and the Department of Financial Protection and Innovation (DFPI) to collaborate and create a regulatory approach to crypto assets.
The order directs DFPI to:
  • Coordinate with the federal government's digital asset regulation strategy set out in President Biden's March 9, 2022 executive order on ensuring responsible development of digital assets (see Legal Update, President Biden Signs Comprehensive Executive Order on Digital Assets Including Exploration of US CBDC) by gathering stakeholder input and generating a regulatory paradigm that comports with federal and other state entities.
  • Obtain public comment on digital asset regulation within 30 days of the order and that the relevant authorities provide a report to the governor within 60 days of the order.
  • Begin enforcement of consumer protection laws, including the California Consumer Financial Protection Law, and consult with relevant law enforcement entities in this endeavor.
  • Publish educational materials regarding digital asset products and services for consumers that are designed to increase awareness and protect consumers and stakeholders.
  • Collect, review, and work with the relevant entities to address digital asset consumer complaints.
The order encouraged members of academia to identify opportunities for research and for fostering innovation in blockchain and crypto assets. It also calls on the state to examine ways of potentially using blockchain solutions and digital assets in state operations.
This Update is based in part on material provided by Thomson Reuters Regulatory Intelligence (TRRI).