Governor Newsom Signs Blockchain Executive Order

Governor Gavin Newsom announced on May 4 an executive order to foster responsible innovation, bolster California’s innovation economy, and protect consumers. It 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.

Under this executive order, and pursuant to the California Consumer Financial Protection Law passed by the Legislature in 2020, California will begin the process of creating a regulatory approach to spur responsible innovation while protecting California consumers, assess how to deploy blockchain technology for state and public institutions, and build research and workforce development pathways to prepare Californians for success in this industry.

The order directs the DFPI and other state agencies to engage in a public process and exercise statutory authority to develop a comprehensive regulatory approach to crypto assets harmonized with the direction of federal regulations and guidance, creating consumer protections, and solidifying California’s status as the premiere global location for responsible crypto asset companies to start and grow. The order sets California on a path to harmonize with forthcoming federal rules and guidelines, to create regulatory clarity for businesses and protect consumers.

A burgeoning industry, crypto assets and blockchain technology surpassed a $3 trillion market cap last November, up from $14 billion just five years prior. According to research, roughly 16 percent of adults have invested in, traded, or used cryptocurrencies. As of April 22, late-stage post-money valuations for venture capital-backed blockchain and crypto asset companies have increased on average 91 percent to $3.95 billion.

If you have questions about the executive order, contact Belinda Alcala in the DFPI Office of Financial Technology Innovation at belinda.alcala@dfpi.ca.gov.