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Blockchain, Cryptocurrency Bills Head to Committee

Legislators this session are proposing bills that would expand and clarify the uses for blockchain and cryptocurrency.

Blockchain database concept illustrated.
Cryptocurrency and blockchain, the electronic ledger technology still under considerable debate nationwide, could soon have a more commanding presence in California if lawmakers approve.

Elected representatives in the state Senate and Assembly have proposed several laws that would expand and clarify the use of blockchain and cryptocurrency in the public and private sectors as well as education — if they should clear the Legislature and win a signature from Gov. Gavin Newsom later this year. Here’s what our electeds are currently considering:

  • State Senate Bill 1190, from state Sen. Bob Hertzberg, D-Van Nuys, would require the California Department of Technology (CDT) by Jan. 1, 2024, to create a “California Trust Framework to provide industry standards and best practices regarding the issuance of credentials to verify information about a person or a legal entity.” It would also require CDT to work with the California Department of Education on standing up a five-year pilot “using verifiable credentials” for high school transcripts. The bill defines a verifiable credential as “a cryptographically secure set of information, created in accordance with open standards, which comply with and protect all existing privacy protections and is a user-controlled, portable means of sharing information in a manner that can be authenticated through publicly available services.” The bill would require the pilot to let participating high schools use those verifiable credentials for student transcripts — and enter into agreements with community colleges to accept the use of those transcripts by students. Hertzberg, who is state Senate majority leader emeritus, told Techwire via email that lawmakers “want to make blockchain technology a part of everyday life in California.”
    “Starting with high school transcripts is an easy way to introduce blockchain to a whole new generation that will come to rely on the technology for the security it provides and trust it creates. Government should always be in the space of innovating and using blockchain technology in credentialing will put our state on the leading edge,” he added. The bill has been introduced and referred to the state Senate committees on Governmental Organization and Education. No hearing dates have yet been announced.
  • State Assembly Bill 2689, from Assemblymember Jordan Cunningham, R-San Luis Obispo, would authorize state entities — either public or private sector — to take virtual currency as payment for goods or services, including for governmental services. It defines a public entity as “the state and every state entity,” including the Legislature, judicial branch, the University of California and California State University systems as well as counties, cities, charter cities and counties, school districts, community college districts, and joint powers authorities and agencies. The bill defines virtual currency as “a digital representation of value that functions as a medium of exchange, unit of account, or store of value, and is often secured using blockchain technology.” The bill has been introduced and referred to the Assembly committees on Banking and Finance, and on Privacy and Consumer Protection; hearing dates haven’t been announced.
  • AB 2781, also from Cunningham, would require the California Employment Development Department — which lost billions to unemployment insurance fraud during the pandemic and was ordered by the State Auditor to remove Social Security numbers from mailed correspondence to reduce identity theft — to “study the feasibility of utilizing blockchain technology.” The bill defines blockchain as “a mathematically secured, chronological, and decentralized ledger or database.” The bill has been introduced and referred to the Assembly committees on Insurance, and on Privacy and Consumer Protection; hearing dates haven’t been announced.
  • Somewhat similarly to AB 2689, though entirely public sector-focused, SB 1275, from state Sen. Sydney Kamlager, D-Los Angeles, would “authorize a state agency to accept cryptocurrency as a method of payment for the provision of government services.” It has been referred to the Senate committees on Governmental Organization and on Banking and Financial Institutions; hearing dates haven’t been announced.
Theo Douglas is Assistant Managing Editor of Industry Insider — California.