Californian lawmakers have passed a bill on the regulation of digital assets that will allow studies into the feasibility of the technology over the next two years.
As reported by the California Globe, California’s Senate Banking and Financial Institutions Committee unanimously passed the bill on August 14, essentially paving the way for research and testing of cryptocurrency and blockchain technology at state level.
A major part of the legislation will be the compiling of a report into the workings and potential benefits and drawbacks of digital assets and blockchain technology. The focus of the report will be on developing clear regulatory guidelines for the space and is expected to be finalised and submitted by January 1, 2022.
Bill could drive crypto/blockchain industry in California
California’s Silicon Valley is considered to be the global hub of tech innovation and has birthed some of the biggest global companies in the industry over the past three decades.
Nevertheless the ongoing regulatory uncertainty towards the blockchain and cryptocurrency space has somewhat hampered the State’s ability to have the same moniker as a leader in the burgeoning sector.
According to California Globe, the State’s Blockchain Advocacy Coalition board member Ben Weiss believes that the new bill will help drive new businesses to explore the blockchain and cryptocurrency space in the state – which has been set back by a lack of regulatory clarity:
“AB 2150 will help set up California as a hub for the burgeoning cryptocurrency and blockchain industry by encouraging virtual currency businesses to operate in the state, encouraged by regulatory clarity. Because the federal government has yet to provide a clear taxonomy of digital assets, regulatory uncertainty has caused many businesses to leave the United States, taking jobs and innovation with them.”
California Securities law
Amendments to existing California Securities law initially took place in May 2020 which looked to provide some clarity on the classification of digital assets under existing legislation.
“This bill, until January 1, 2026, would create an exception from the above definition by providing that a digital asset meeting specified criteria is presumptively not an investment contract within the meaning of a “security.”
The United States Securities and Exchange Commission sought to provide clarity on this subject in April 2019 by publishing a framework to analyse the nature of different digital assets.
This aimed to help regulators better police the issuance and development of various cryptocurrencies and initial coin offerings. The framework would help regulators ascertain if these offerings met the standards of a Security offering.
The state of California’s efforts to better understand the nature and characteristics of cryptocurrencies and blockchain will no doubt help in driving better regulatory guidelines for the industry.