One U.S. state known for being the birthplace of technical innovation is now moving to embrace cryptocurrency as no other state has before. California Gov. Gavin Newsom signed an executive order last week to begin crafting regulations for digital currencies in the state. It comes after President Biden signed a similar executive order in March, which calls on the Federal Reserve to consider whether it should create its own digital currency. Jarrod Loadholt, Partner Ice Miller LLP, joins Cheddar News to discuss how California's new executive order will impact the state's economy and the broader crypto industry.

Closing Bell

California Governor Newsom Signs Executive Order to Regulate State's Crypto Industry

Okay, well one US state known for being the birthplace of technical innovation is now moving to embrace Cryptocurrency like no other state before California. Governor Gavin Newsom signing an executive order last week to start crafting regulations for digital currencies in the state does come after President biden signed a similar executive order in March, which does call on the Federal Reserve to consider whether it should create its own digital currency. And joining me now is Jared load. Holtz's partner at the law firm Ice Miller LLP Jared. Thanks so much for coming on the show to talk to me more about this executive order and what it means for California's crypto industry. No, so this is uh, one. Thank you for having me. I think this is a groundbreaking executive order because I think this is the first state where governor has said, we want this to happen here in this state and here the concrete steps that we're going to take in light of what has already happened in Washington. Because you read the executive order, a lot of what they're saying is what we're going to do will be consistent and aligned with and be harmonized with whatever the federal government says and does. Um, so this is, I think, you know, welcomed. I think, you know, a development, I think if you're in the industry in California, that's I think a good first sign, right? But there's still a lot more work. I think that has to happen to give industry. I think that kind of comfort. They want to make California home long term, but I think this is good for, so what's the irony here? Right? I mean, Miami certainly was sort of the crypto hotspot. There's actually a lot of mining happening here on the Northeast in texas as well. And now California, the greenest state of all states, I'm sure accepting Cryptocurrency despite the pushback about environmental concerns. What's the irony there? How does Gavin Newsom make the case that this should be a crypto state even though it does have an impact on climate? Yeah, I mean, look, I think crypto mining, right, is its own thing. And I would imagine that there are folks who would probably take issue in California with the energy usage. I think that comes with mining, but there are other parts of the industry that, I mean, you have corporate offices for, you know, crypto companies and people that are part of the crypto ecosystem. So it's beyond going beyond mining. So, I mean, look, I think mining probably will have a home in states that have maybe lower energy costs and more space. So California may not be the perfect state for mining. Bitcoin, but for other parts of it perhaps, right, because you already have pretty robust tech ecosystem, you've got the higher education institutions, You've got the people. But I mean, I think this is a competitive marketplace where states are competing against each other to create the kind of regulatory environment that gives companies say, Hey, maybe we should, you know, bring our 800 or you know, employees to this state. Right. And so I think looking beyond Bitcoin mining, I think there are lots of opportunities, but California is one of many states that are competing. So it is interesting because as part of this executive order from the state, I know the state officials calling to explore incorporating Blockchain computer coding into the government operations. So clearly, it does seem as if they are doubling down on this. There's been a lot of Blockchain technology and innovation, certainly at a silicon valley, um, in that very state, what would this mean? I mean, it could mean a lot, I mean, you could see people using digital assets in exchange for government services. Right, imagine a world where you can pay your state taxes with digital assets, maybe you are paying a ticket or fine for a court fee, maybe you'll be able to do that. Right. And so I think there's some immediate payment solutions that are possibly on the table with government services. I think you had a state or two who said you can pay your taxes. So, I mean, again, I think if government can incorporate Blockchain and this kind of payments technology into their normal kind of business, essentially how they interact with residents and businesses, this could be a big deal. Right. But I think it's very much wait and see because ultimately if government says they're going to do it. I think you got to wait to see if they have the capacity to do it, the timing on it. So, I mean, there's still a lot of questions as to whether or not they can actually pull this off, but this is a a good, a good thing, right? Like we I think we should all welcome this development. So noteworthy though, that I think obviously still concerns about the crypto market being overvalued with this is this is huge news, right? Um of course, the back in California, that state alone, one of the biggest economies in the world yet, crypto market underperforming today. So how do you basically make sense of that situation? I mean, look, it's an asset class is gonna have day to day volatility, right? You're going to have that, right? But I think ultimately the underlying technology, I think one of the really positive developments from this executive order is an embracing of Blockchain technology, broadly speaking. Right? And so that goes beyond some of the things that we talked about with crypto and digital assets. Um and so, I mean, I think that's a good thing, right? And there are lots of applications and use cases, kind of beyond digital assets. So, I mean, I think that's a good thing the day to day volatility. Look, that's gonna happen, that's gonna happen with anything. Um, but so ultimately, though, I think you still, they'll still move forward with it, no matter what happened with the marketplace, and I think one of the good things that they talk about investor and consumer protection in this executive order as well. So ultimately, the concern with volatility is, look, is it unnecessary volatility? And do consumers and investors have recourse? I think ultimately, that's something that this executive order addresses as well Jared. We appreciate the time that's Jared, load hold partner at Ice Miller, LLP, talking all things crypto.