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California Seeks to Develop a Framework for Blockchain Technology and Cryptocurrency

On May 4, 2022, Governor Newsome signed Executive Order N-9-22, which establishes California as the first state in the United States to “create a transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values, such as equity, inclusivity and environmental protection.”

In a press release associated with the signage of the Executive Order, Governor Newsome explained that the order aims to follow through on the following seven action items:

  1. Create a transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values such as equity, inclusivity and environmental protection.
  2. Collect feedback from a broad range of stakeholders, create a regulatory approach to crypto assets harmonized between federal and state authorities, explore and establish public-serving use cases (such as incorporating blockchain technologies into state operations), and build research and workforce pipelines.
  3. Collect feedback from a broad range of stakeholders for potential blockchain applications and ventures, with particular attention to crypto assets and related financial technologies. Engagement should include technical experts, stakeholders interested in addressing inequities and environmental impact, companies both based in and outside California, and more.
  4. 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.
  5. Engage in and encourage regulatory clarity via progress on the processes outlined in the federal executive order, with state agencies coordinating closely with the federal government, and the Office of the California Governor.
  6. Explore opportunities to deploy blockchain technologies to address public-serving and emerging needs, working with the private sector, academia, and community to present pilots for innovative policies, programs, and solutions that demonstrate and showcase the potential of adopting blockchain technologies to respond to specific challenges identified by state agencies.
  7. Identify opportunities to create a research and workforce environment to power innovation in blockchain technology, including crypto assets. The goals will be to expose students to emerging opportunities, power emerging industries and help ensure economic benefits are experienced equitably.

What is a Blockchain and What Does this Mean for Employers?

A blockchain is a scattered database that is shared among the connections of a computer network. As a database, a blockchain stores data digitally. Blockchains are best known for their crucial role with cryptocurrency, for maintaining a secure and decentralized record of transactions. The ultimate goal of a blockchain is that it guarantees the verifiability and security of a record of data and generates confidence without the need for a trusted third party. Crypto assets refer to a digital asset, which may be a medium of exchange, for which generation or ownership records are supported through a blockchain technology.

At this time, the use of blockchain technology in mainstream business is still in the process of being determined. However, with the issuance of Governor Newsome’s executive order, this may be sending the correct message to employers looking to utilize blockchains and crypto assets to conduct business. For instance, having one comprehensive set of state regulations in which to operate, could make businesses feel more secure with incorporating blockchain technology into their operations. Furthermore, by California state agencies adopting the use of blockchain technology and “leading by example,” this could be a powerful incentive for businesses and employers located in California to follow suite with this evolving trend.

HR Works, Inc., headquartered at 200 WillowBrook Office Park in Fairport (Rochester), New York, with an office in East Syracuse, is a human resource management outsourcing and consulting firm serving clients throughout the United States. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.