Shalini Nagarajan

A government agency in the most populous US state, California, is testing blockchain technology using a private fork of Tezos to execute some of its record keeping, including the issuance of car ownership and simplifying transfers of such ownership.



The CA Department of Motor Vehicles (DMV) is expected to develop consumer-facing applications such as digital wallets and car title NFTs later this year, according to Ajay Gupta, the agency’s chief digital transformation officer.



The state opted to team up with Tezos and crypto software provider Oxhead Alpha to embrace California’s <a href="https://www.govops.ca.gov/wp-content/uploads/sites/11/2020/07/BWG-Final-Report-2020-July1.pdf" target="_blank" rel="noreferrer noopener">roadmap</a> to explore crypto adoption, according to an Oxhead <a href="https://www.oxheadalpha.com/PR_20230125_DMV.html" target="_blank" rel="noreferrer noopener">statement</a>.



Oxhead Alpha has built a set of smart contracts on a version Tezos — but not the public permissionless chain — to test e-titles, enabling the electronic exchange of title information, in a move that could lessen processing time for documentation. California had over 30 million <a href="https://www.valuepenguin.com/auto-insurance/car-ownership-statistics#state-total" target="_blank" rel="noreferrer noopener">registered</a> vehicles as of 2020.



Gupta told <a href="https://fortune.com/crypto/2023/01/26/california-announces-dmv-run-blockchain-through-partnership-with-tezos/" target="_blank" rel="noreferrer noopener">Fortune</a> that he hopes the plans to materialize the title database on blockchain come to fruition in the next three months.



This collaboration comes after California Governor Gavin Newsom last year <a href="https://blockworks.co/news/california-unveils-crypto-executive-order-as-competition-for-us-crypto-capital-builds">signed an executive order</a> directing state agencies to discern ways in which they can employ blockchain technology and digital assets. 



The use of blockchain-based projects has evolved in use cases, pushing developers to build out more decentralized applications. Several governments and business entities have been pursuing its adoption in sectors including capital markets, healthcare, insurance and digital identities.



The pilot is the latest example of attempts to find technology solutions that benefit enterprises looking for smoother compliance and efficiency in their business operations. In another instance, a Cleveland-based startup called ChampTitles looking to overhaul the car title and registration systems using blockchain raised nearly <a href="https://www.crainscleveland.com/technology/cleveland-startup-champ-titles-raises-129-million-series-b-investment-round" target="_blank" rel="noreferrer noopener">$13 million</a> in a Series B round in September.



California has also listed its Department of Food and Agriculture for pioneering a similar project to track food-borne contamination through the collection and organization of data from parties involved like growers and transporters, and proposed moving state archives on a similar ledger.



The DMV-specific project itself is up and running with validator nodes, but is yet to cover broader services like title transfers between states.



This story was updated on Jan. 27, at 9:12 a.m. ET, to clarify that the pilot is not running on public Tezos.



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California Pilots Blockchain Car Title Management System on Tezos Fork

Sebastian Sinclair

<div id="highlights-block_63315fa8f3c36" class="highlights">
 <ul>
 <li>California’s governor has refused to sign a digital assets bill that sought greater regulatory clarity</li>
 <li>Initially decreed by the governor via executive order, the bill would have established a licensing regime similar to those overseas</li>
 </ul>
 
</div>



California’s governor has vetoed a bill — born out of an executive order he issued in May — that sought to establish a licensing and regulatory framework for digital assets.



The bill would have tasked crypto companies with seeking a license to offer their services or digital assets to the state’s residents.&nbsp;



It would have also formally adopted new rules governing stablecoins, including requirements that licensed companies only engage with bank-issued stablecoins, which must remain 100% backed by reserves.



Governor Gavin Newsom said his reasoning was due to the bill’s “premature” nature to lock in a licensing regime under Assembly Bill 2269 without first considering prior research and forthcoming federal actions.



At least four <a href="https://cms.blockworks.co/us-regulators-release-first-of-many-reports-on-crypto-following-exec-order/" target="_blank" rel="noreferrer noopener">US watchdogs</a> — the Secretary of the Treasury, the Secretary of State, the Secretary of Commerce and the Agency for International Development — as well as “other relevant agencies” participated in one of many reports on digital asset regulation in July.



The report included the usual well-worn arguments from government officials, including the need to regulate stablecoins following Terra’s collapse, as well as the potential for criminal use and financial instability resulting from the new asset class.



“A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases and is tailored with the proper tools to address trends and mitigate consumer harm,” the governor said in a <a href="https://www.gov.ca.gov/wp-content/uploads/2022/09/AB-2269-VETO.pdf?emrc=bb881d" target="_blank" rel="noreferrer noopener">statement</a> addressed to members of the California State Assembly.



Newsom also said that presenting a new regulatory program was a costly undertaking which, as the governor stated, would require a loan from the state’s general fund exceeding tens of millions of dollars during the bill’s initial implementation.



“Such a significant commitment of general fund resources should be considered and accounted for in the annual budget process,” the governor said.



Crypto proponents across California and the US have been asking for clearer guidelines on digital assets since at least 2015 shortly following the <a href="https://web3caff.com/archives/15720" target="_blank" rel="noreferrer noopener">birth of Ethereum</a>. Several boom and bust cycles throughout crypto’s short history have also prompted <a href="https://cms.blockworks.co/eu-members-reach-agreement-on-mica/" target="_blank" rel="noreferrer noopener">regulators to act</a>.&nbsp;



The governor said that while he had refused to sign the bill into law, he would work “collaboratively” with California’s legislature to achieve regulatory clarity only after federal regulators had metered out their own stance toward the new asset class.



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California Governor Newsom Vetoes Crypto Bill

Casey Wagner

<div id="highlights-block_6272ec027f842" class="highlights">
 <ul>
 <li>The governor’s latest executive order looks to create transparent regulation around digital assets</li>
 <li>The state is hoping to align itself with upcoming policy from the federal government</li>
 </ul>
 
</div>



The state known as a bastion of technology and an economy that dwarfs many a nation is warming up to digital assets — and the need to regulate them, specifically.&nbsp;



Gov. Gavin Newsom signed an executive order Wednesday aimed at establishing regulatory guidelines around the digital asset industry that protect investors while fostering innovation, Newsom’s office <a href="https://www.gov.ca.gov/2022/05/04/governor-newsom-signs-blockchain-executive-order-to-spur-responsible-web3-innovation-grow-jobs-and-protect-consumers/" target="_blank" rel="noreferrer noopener">said</a> in a statement.&nbsp;



“California is a global hub of innovation, and we’re setting up the state for success with this emerging technology – spurring responsible innovation, protecting consumers, and leveraging this technology for the public good,” Newsom said. “Too often government lags behind technological advancements, so we’re getting ahead of the curve on this, laying the foundation to allow for consumers and business to thrive.”



The executive order builds on <a href="https://cms.blockworks.co/whos-in-charge-of-what-breaking-down-the-crypto-executive-order/" target="_blank" rel="noreferrer noopener">President Biden’s recent moves</a> to bring regulatory clarity to the emerging asset class, according to Newsom, with the hopes of positioning California ahead of the curve in terms of looming federal policy.&nbsp;



Newsom’s gambit comes as mayors in New York and Miami are maneuvering to roll out crypto-friendly regulations that could establish their metropolitan areas as the US’ crypto hub.&nbsp;



Denelle Dixon, CEO of the Stellar Development Foundation, told Blockworks it’s a “huge win” to see California take blockchain rule-making seriously, especially when it comes to job creation.&nbsp;



“Best known as the home of Web2, the governor’s call today was a move toward a Web3 future,” Dixon said.&nbsp;



Under the executive order, California officials are tasked with soliciting feedback from industry participants, as well as the public, the statement said. Lawmakers are also set to consider how blockchain technology could be used to address public — and policy — needs.&nbsp;



<a href="https://cms.blockworks.co/new-york-bill-banning-proof-of-work-crypto-mining-poised-to-advance/" target="_blank" rel="noreferrer noopener">New York</a>, meanwhile, is considering a bill that could curtail proof-of-work mining, namely, bitcoin. <a href="https://cms.blockworks.co/illinois-moves-closer-to-accepting-crypto-for-taxes-but-not-considering-legal-tender-status/" target="_blank" rel="noreferrer noopener">Illinois lawmakers</a> have introduced a measure that would allow the department of revenue to accept crypto payments, while <a href="https://cms.blockworks.co/colorados-plans-to-accept-tax-payments-in-crypto-could-be-rocky-for-investors/" target="_blank" rel="noreferrer noopener">Colorado</a>’s governor pushes for cryptocurrency tax payments.&nbsp;&nbsp;



“Like many things in United States politics, crypto regulation trickles up from the states,” Ron Hammond, director of government affairs for the Blockchain Association, said. “A lot of battles we see happening at a state level do trickle up to the [federal level].”



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