US states are filling the void on crypto rules left by federal inaction

At Coinbase, we believe crypto and blockchain technology have the ability to increase economic freedom and opportunity around the world.  That’s why we’re working hard to help update the financial system by building trusted products that expand the utility and adoption of crypto.   Coinbase decided to become a public company in the US because we believe America is well suited to lead  the technological transformation enabled by blockchain technology.  But government leaders and regulators at the federal level have adopted a disjointed, regulation-by-enforcement approach that has the potential to negatively impact American competitiveness and national security.  Thankfully, government officials in many states — where crypto is also regulated — are working hard to make sure the US stays on even footing with global leaders around the world, who are pushing to create “crypto hubs, globally.” 

As federal policymakers continue to look for national policy solutions, lawmakers on both sides of the aisle at the state level have increasingly stepped in to fill the void. State policymakers recognize the economic opportunity crypto presents for constituents and innovators in their state, and are eager to develop regulatory guidelines enabling crypto companies to operate safely. Coinbase is encouraged by progress several states have made toward establishing workable regulatory solutions for crypto by not just relying on closed door conversations – but by welcoming the input and experience of industry leaders, academics, and the American public to advance ideas that encourage crypto innovation and protect consumers. 

Policymaking at this level is too important to be done in a black box or through one-off enforcement actions, and we’re glad to see states taking the lead. From coast-to-coast, a bipartisan group of governors, legislators, and state agencies are advancing crypto and innovation-forward proposals, for instance: 

• New Hampshire: Governor Chris Sununu (R) released the final report and recommendations compiled by the Governor’s Commission on Cryptocurrencies and Digital Assets. The report recommends that the New Hampshire government should devote resources to establishing a state legal regime that will offer an attractive jurisdiction for the best responsible Blockchain innovators, entrepreneurs and businesses, while protecting investors and consumers who use their applications.

• California: Governor Gavin Newsom’s (D) Office of Business and Economic Development, the Business Consumer Services and Housing Agency, the Department of Financial Protection and Innovation, and the Government Operations Agency published an interagency report on responsible innovation. The report laid out six recommendations for California to remain the leader of responsible blockchain innovation.

• Wyoming: In March, Governor Mark Gordon (R) signed the Wyoming Stable Token Act, becoming the first state to enact a law allowing it to create its own stablecoin. This measure authorizes the State Treasurer to begin issuing Wyoming stable tokens. A Wyoming stable token is a virtual currency representative of and redeemable for $1 held in trust by the state of Wyoming. Tokens can only be issued in exchange for US dollars.

• Colorado: Last year, Governor Jared Polis (D) instituted a policy that allows crypto holders in Colorado the ability to pay their tax payments in digital currency and the state would convert back into fiat. 

Also, the New York Department of Financial Services under the leadership of Superintendent Adrienne Harris has modernized the agency and positioned New York as a national leader in crypto regulation. We applaud these states, and others, that are filling the void left by inaction at the federal level and setting the standard for how government, industry, and society can collaborate to develop rules that enable innovation while protecting consumers. 

The stakes are high for crypto in the US. According to a recent report from Electric Capital, the US has lost market share of developer jobs in blockchain each of the last five years, and we are at risk of missing out on an anticipated 4 million more developer and non-technical jobs in blockchain by 2030. Clear and responsible regulation that enables the blockchain industry to thrive in the US is critical to our preeminence in the finance and tech sectors, and this work needs to happen transparently, not through one-off enforcement actions.

At the federal level, we’re continuing our efforts to work with policymakers and regulators to develop a comprehensive regulatory framework. Ultimately, clear guidelines from Congress and transparent rulemaking from regulators will substantially impact crypto’s success here in the US. To maintain our global economic competitive edge, we need to bring crypto safely and holistically into the regulatory perimeter by developing a single federal framework that marries innovation in financial services with appropriate protections for consumers. 

As these policy discussions continue to take shape at both the state and federal level, it’s more important than ever for crypto advocates to join the conversation and make sure the voices of the community are heard. Anyone who cares about the future of crypto can sign up to join Crypto435 to get tools and resources to learn about the issues and how to advocate for pro-innovation policies at both the state and federal level.  

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