California, which has the largest economy of all but four countries and where many of the world’s technological innovations have been born, on Wednesday became the first state to officially begin examining how to scale-up cryptocurrency and related innovations.
Following the path President Joe Biden charted in March, Gov. Gavin Newsom has signed an executive order for government agencies to move along with the federal government to create regulations for digital currencies. It also asks officials to explore incorporating blockchain computer coding on a larger scale into government operations.
The evolution of blockchain technology and cryptocurrency “has the potential to be an explosive generator for new businesses, new jobs, and new opportunities,” said Dee De Myers, a senior advisor at Newsom and director of the Portfolio’s Office of Business and Economic Development.
“There are a lot of opportunities,” he said. “There are also many unknowns in the industry which is another reason why we want to get involved soon.”
Newsom’s order states that the state, home to Silicon Valley and financial innovators such as PayPal and Square, should be at the forefront of figuring out how to adapt to new technologies.
“Often times government lags behind in technological progress, so we are leading the curve in this regard, laying the foundation for consumers and businesses to thrive,” Newsom, a Democrat, said in a statement.
California has a population of about 39 million, and an economy of over $3.1 trillion, larger than the United Kingdom and India. Newsom said its request is a step toward making it the first in the country to “create a comprehensive, considered and harmonized regulatory and trading environment for crypto assets.”
Cryptocurrencies, which are based on blockchain database technology, have exploded in recent years. About 16% of adults in the United States have invested, traded or used cryptocurrency, and the percentage is much higher among younger men. Biden’s executive order is in part asking the Federal Reserve to consider whether it should create its own digital currency.
Blockchain creates basic transparency for a ledger that is decentralized but publicly visible. The technology can also be used to record other types of information, such as property records. Logs are kept on so many computers that together make up a global network that no person or organization can control them.
There is strong disagreement about the legality of cryptocurrency, even among some of the world’s richest people. Elon Musk is a staunch supporter of dogecoin, while Warren Buffet recently said he would not pay $25 for all the world’s bitcoins, the most popular cryptocurrency. Each bitcoin is currently valued at around $38,000 but fluctuates greatly.
Hillary Allen, a professor of financial regulation at American University in Washington, DC who is skeptical of cryptocurrencies, said California’s approach would help legitimize the technology and bring it into the mainstream. But he does not believe that this is the best approach for the state and its residents.
He said private investors are very likely to benefit, while the state government should seek simpler technological solutions rather than resort to technology that is “inherently complex and inefficient”.
“While this approach will create more of a market for cryptocurrencies…it is unlikely to produce the best results for California utility users,” Allen said.
California may have been the first to try to develop a global approach, but Ohio was the first to try to accept virtual currency for government services in 2018, although the program was soon discontinued due to the few people using it.
Colorado Governor Jared Polis, also a Democrat, said in february His state will begin accepting cryptocurrency for government services by the end of the year.
California legislators are among many in the United States who have introduced relevant legislation. But the bill by the age. Sidney Kamlager failed to allow the state of California to accept crypto assets for state services on its first committee this year and a similar bill was blocked by Republican Assemblyman Jordan Cunningham.
Similar measures have been introduced in Arizona, Wyoming, and other states.
Despite the potential pitfalls of cryptocurrency, Newsom’s request states that California should take the lead in figuring out how to adapt to technological development.
His request is based on a July 2020 report from the California Blockchain Working Group, which examined the use of blockchain along with its risks and benefits.
That same year, California created a new Department of Financial Protection and Innovation from what was known as the Department of Business Oversight, with the goal of assessing emerging risks and opportunities while protecting consumers.
Newsom’s request requires management to develop disclosure guidelines for companies when offering financial products and services related to cryptocurrency. It will also provide guidance to state-owned banks and credit unions regarding crypto-related products.
The department will respond to consumer complaints, work with crypto companies to resolve consumer complaints, and take enforcement measures when needed. It will also publish educational materials for consumers, including tips on how to avoid scams and scams related to cryptocurrency.
Newsom’s order directs a separate agency to solicit proposals on how best to use blockchain to help the state and the public.
“It is essential to get involved in the industry early and start learning the ins and outs of innovative technology early,” said Amy Tong, secretary of the California State Operations Agency. “We can take the following steps to anticipate the curve and harness the potential of these tools to improve governance.”
© 2022 Associated Press. All rights reserved. This material may not be published, transmitted, rewritten, or redistributed without permission.