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As United States federal policymakers look to implement cryptocurrency and blockchain regulations, state-led organizations are taking initiatives to ensure that policies focused on cryptocurrency and blockchain adoption within the US pass. This is important to consider as U.S. federal policymakers remain divided over policies targeting the use of cryptocurrency and blockchain technology.
Dominic Folino, chairman of the Pennsylvania Blockchain Coalition – a non-profit organization made up of blockchain allies, users and providers – told Cryptonews that the legislation is not coming out of the US Congress quickly enough. As a result, states now have the opportunity to implement policies that can ultimately be pushed to the federal level.
The importance of state legislation and cooperation
To push state legislation, Folino explained that the Pennsylvania Blockchain Coalition has joined forces with the U.S. Blockchain Coalition (USBC). USBC was founded in June 2021, when thirty US states initially came together to enable blockchain and crypto policies.
Arry Yu, chairman of the Washington Technology Industry Association Cascadia Blockchain Council – a founding member of USBC – told Cryptonews that there are currently forty-six states within USBC that are working closely together on drafting legislation. “We aim to have all fifty states become part of this coalition in the coming weeks,” Yu said.
What a collaborative and insightful Summit hosted by the @TXblockchain_! The CA BAC was excited to join our colleagues in PA, FL, and @blockcoalition on this panel! Blockchain policy started in the United States, and that is where the real innovation can and will happen. https://t.co/Rb6ISDjUfJ
– CA Blockchain Advocacy Coalition (@BlockAdCo) November 30, 2023
Yu explained that USBC was founded with the aim of driving and conducting policy analysis, development and advocacy around blockchain technology and cryptocurrency at the state level. She said:
“It is important that states promote advocacy and clarity because states are the best laboratories for democracy. We are much more agile than the federal level. We are also closer to those who have the people’s mandate because we are hyper-local and work at the grassroots level.”
Yu further noted the importance of U.S. states working together to make legislation possible. “Before USBC, we saw crypto-friendly states like Wyoming, Florida and Texas not communicating with each other, creating silos in legislation. This was no better than what we currently see at the federal level. By working together, states enable the sharing of best practices to create legislation that can be adopted across states and even at the federal level,” she noted.
To put these points into perspective, Folino explained that the Pennsylvania Blockchain Coalition recently spoke with the Pennsylvania state legislature about passing a bill similar to New York’s “BitLicense” regulations. The BitLicense Bill gives crypto companies permission to legally operate in New York State. “This would make Pennsylvania pro-business when it comes to crypto companies planning to operate here,” he said. Folino also said he has been in contact with some representatives of the Pennsylvania House of Representatives to help them understand the benefits of blockchain and cryptocurrency policies.
Mike Cabell, a legislator for the state of Pennsylvania, told Cryptonews that both USBC and the Pennsylvania Blockchain Coalition have served as fantastic resources for education and connections with other state legislators to develop digital asset technology and policy. He said:
“The most important thing to keep in mind is education. I have been reading and learning about blockchain technology and cryptocurrency for years, but it is very complex. These organizations have been instrumental in educating my constituents and colleagues.”
Continued education of the industry remains extremely important, as Cabell shared that he is currently working to introduce a “Blockchain Basics Act” within the state of Pennsylvania. “This law will ensure that Pennsylvania has a regulatory structure that will encourage industry and protect consumers,” Cabell explained. While this bill is new to Pennsylvania, Cabell added that Pennsylvania used policies from other pro-crypto and blockchain states to help craft the document.
While Pennsylvania focuses on encouraging businesses to the area, Yu said Washington state and the Cascadia region in general — which also includes Oregon, Washington and British Columbia — remain driven by blockchain legislation. “We want to achieve goals of making the Pacific Northwest the best place to work and live, while embracing emerging technologies like blockchain. This includes using new technologies for things like portable health records and a regional economic visa to help grow the workforce and make it easier for workers to move around the region,” she explained.
Similar to the goals Yu described, Jaime Minor, lead attorney for the California Blockchain Advocacy Coalition — an organization dedicated to educating lawmakers and regulators about blockchain technology and a USBC member — told Cryptonews that she believes blockchain technology can solve problems that lawmakers and their constituents have. currently facing. “Each state has unique issues and priorities based on their needs. “The California Blockchain Advocacy Coalition looks forward to working with the Legislature in 2024 on ways that blockchain technology can help streamline data, including eliminating backlogs that hinder the construction of affordable housing,” she said .
Samuel Armes, president of the Florida Blockchain Business Association – a non-profit organization that promotes blockchain and cryptocurrency innovation and a member of USBC – further told Cryptonews that Florida has already passed a number of crypto-friendly bills with the help of USBC. He believes these pieces of legislation could even influence the federal government in the future. He said:
“We currently have a Bitcoin Kiosk Bill, a Digital Gold Bill and an Anti-SEC/Pro DAO Bill. We also have about three to four appropriators from the state pushing to fund various programs.”
According to Cabell, there is a good chance that state-level policies will ultimately influence federal policy. He said:
“I believe the best thing states can do at this time is to apply common sense legislation and policies that will allow this industry to grow and prosper responsibly. I hope to reach out to Congress to let them know what is being accomplished and how policies from a federal perspective can align with these initiatives. We test everything in the United States to get it right before we get federal policy.”
Challenges can hinder state innovation
While blockchain and cryptocurrency innovation at the state level is notable, there are a number of challenges that could hinder adoption. For example, Folino believes that a lack of education among state policymakers could lead to delayed passage of legislation. “State legislatures have several committees trying to absorb information, but don’t have robust staff like members of Congress. We also need to demonstrate that blockchain and cryptocurrency innovation is bipartisan,” he said.
Echoing Folino, Minor believes there is still a large knowledge gap for state lawmakers. “Lawmakers often equate blockchain technology with Sam Bankman-Fried and the collapse of FTX. Yet the potential for blockchain technology is infinite,” she noted. To address this knowledge gap, Minor explained that much of her organization’s advocacy focuses on education and breaking misconceptions related to blockchain.
Armes pointed out that coordination is key to driving innovation in large states like Florida. However, he noted that Florida’s multiple epicenters, each with their own appeal, can often create internal competition. He said:
“This sometimes makes an organized message much more difficult, because the pace at which Florida’s Web3 scene is growing is faster than it can be organized politically. This is why we put a lot of effort into supporting local meetings across the state, to connect the community to the larger community.”
Still, Armes believes that states ultimately offer some advantages when it comes to implementing crypto and blockchain legislation. “States can be aggressive and push the boundaries of legislation, especially when Congress is in bipartisan gridlock,” he said. Armes further noted that states can ban federal initiatives that may harm the web3 and blockchain communities in those regions. “For example, we were able to ban the digital currency of the central bank in Florida,” Armes said.
In addition to the state’s achievements, Folino said USBC is generally focused on crafting legislation that will be passed by each state. “If we can come up with model legislation that applies at all state levels, perhaps this will help spur federal legislation.”