The Executive Order aims to strengthen consumer protection and cultivate innovation in digital assets and related financial products and services.

By Christopher D. Frey, Scott D. Joiner, Barrie VanBrackle, Katherine A. Sawyer, and Scott Kanchuger*

On May 4, 2022, California Governor Gavin Newsom issued an Executive Order (California Order) calling upon California state agencies to develop stronger regulatory and enforcement mechanisms for blockchain technology, cryptoassets, and related financial products and services. Recognizing the historical costs of reactive government regulation for new technologies, the California Order seeks to draw upon the benefits of early engagement by public institutions to “manage emerging risks and opportunities, with the twin goals of strengthening consumer financial protection and cultivating responsible innovation.”

The California Order is the first of its kind in any state and follows President Biden’s March 2022 Executive Order on Digital Assets, which calls for greater federal regulation and enforcement activity over digital assets and related technologies. The California Order aims to create a “transparent and consistent business environment for companies operating in blockchain … that harmonizes federal and California laws” and “balances the benefits and risks to consumers.” Governor Newsom ordered California state agencies to “work with, and concurrently to, the federal government” to “establish a comprehensive, thoughtful, and harmonized regulatory and business environment for crypto assets.”