Crypto Policy and Regulation News Round-Up, May 7th, 2022

California Governor signs executive order encouraging crypto and blockchain innovation

On May 4th, California Governor Gavan Newsom signed an executive order encouraging blockchain and crypto innovation in the Golden State.

The order aims to create a “transparent and consistent” regulatory framework where blockchain businesses can develop, while at the same time balancing the risks and benefits to consumers.

At present one-quarter of blockchain startups are based in California and the state has the fifth-largest economy in the world.

The impact of blockchain technology is both uncertain and profound, with the potential to reconfigure the logic and structure of the World Wide Web and its place in modern society.

The order also states that government agencies will examine public use cases for blockchain, including looking into ways in which blockchain technology could be incorporated into “state operations”.

The Department of Financial Protection and Innovation (DFPI) is also tasked with requesting input from stakeholders with a view to publishing guidance for California state-chartered banks and credit unions by March 31, 2023.

Nvidia Fined $5.5m by the SEC

Gaming company Nvidia was fined $5.5 million by the Securities and Exchange Commission (SEC) for failing to disclose the impact of its crypto mining operations on its revenue.

The SEC said in a press release that “the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming.”

The SEC fined Nvidia for non-compliance with Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934.

SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit

In related news, SEC Enforcement announced this week that they will nearly double the size of their crypto assets and cyber unit. Twenty additional positions will be added to the unit, bringing the total headcount to 50 personnel.

SEC Chair Gary Gensler said that “The Division of Enforcement’s Crypto Assets and Cyber Unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets. By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.“

Argentinian Central Bank issues warning to banks offering digital asset services

On May 5th, Argentina’s Central Bank published a notice discouraging banks and other financial institutions from digital asset and cryptocurrency-related services.

The warning appears to have been issued on foot of new crypto services being offered by Banco Galicia, the country’s largest private bank, and Brubank (a “neo-bank”). On May 3rd both banks launched new services allowing customers the option to purchase cryptocurrencies, such as Bitcoin, XRP, and Ethereum via their respective banking apps.

The Central Bank said that its aim is to protect consumers from the potential risks involved with crypto, including volatility, cyberattacks, and money laundering.

EU Financial Services Commissioner Pens Article Calling for “Global Approach” to Crypto Regulation

Mairead McGuinness, the EU’s Financial Services Commissioner recently authored an article in the Hill, in which she expressed her view on cryptocurrency regulation.

A global agreement on crypto should first enshrine that no product remains unregulated. Second, supervisors should collect and exchange information globally. Third, any agreement must protect retail investors. Fourth, the crypto ecosystem should fully integrate environmental considerations.

Mairead McGuinness, EU Commissioner for Financial Services, financial stability and capital markets union 

In the opinion piece, McGuinness called for greater cooperation between the EU and US. In particular, she said that the two should lead the way in enabling innovation, while also protecting consumers and maintaining financial stability.