California Advances in Generative AI with New Report

The Newsom Administration released an insightful report in response to Governor Gavin Newsom’s Executive Order from September 2023. This report focuses on the utilization and potential challenges of Generative Artificial Intelligence (GenAI) within the California state government. As the first in a series of planned publications, it marks a significant step in the state’s journey to harness and regulate this emerging technology.

Governor Newsom emphasized the importance of this undertaking, highlighting the need for a comprehensive understanding of GenAI. He pointed out that the state’s approach must balance the risks and benefits of this transformative technology. The report offers a nuanced perspective on GenAI, analyzing the economic and transformative benefits while identifying potential risks and high-risk use cases.

The document discusses strategies for the state to improve access to programs, enhance the speed of ongoing work, and effectively manage complex data sets through the use of GenAI. It emphasizes the importance of conducting secure, controlled pilot programs for effective implementation. Additionally, the report identifies potential applications of GenAI in enhancing the accessibility of government services, especially for groups facing barriers such as language.

State officials, including Secretary Amy Tong, highlighted California’s role as a pioneer in adopting GenAI in government functions. Dee Dee Myers, a Senior Advisor to the Governor, underscored California’s leadership in the AI industry and its commitment to fostering a robust AI workforce. Liana Bailey-Crimmins, Director of the California Department of Technology, discussed the potential of GenAI to improve service delivery and predictive capabilities for Californians.

Looking ahead, the Governor’s Executive Order includes directives for conducting a Risk-Analysis Report on California’s critical energy infrastructure and developing a Procurement Blueprint to guide safe and ethical GenAI applications in state operations. The state also plans to create a Deployment and Analysis Framework to evaluate the impact of GenAI on vulnerable communities and initiate State Employee Training programs to prepare the workforce for the GenAI economy. Additionally, a GenAI Partnership and Symposium are to be formed in collaboration with UC Berkeley and Stanford University. Legislative engagement is planned to develop policy recommendations for AI usage, with periodic assessments of the impact of GenAI on regulatory matters.

The report also emphasizes the importance of education and training in GenAI, responding to its anticipated impact on the global job market. It cites a projection by Goldman Sachs that GenAI could affect 300 million jobs worldwide and suggests incorporating AI education in vocational and higher educational institutions. This aligns with recent studies on AI’s potential impact on employment, including a report by the OECD.

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California Proposes Crypto ATM Regulations Amid Rising Fraud

In a bid to curb the rising tide of fraudulent activities, California lawmakers have introduced a measure termed “Digital Financial Asset Transaction Kiosks.” The measure advocates for a daily withdrawal limit of $1,000 from cryptocurrency ATMs. Furthermore, the bill proposes a cap on operators’ fees at $5 or 15%, whichever is greater, effective from the year 2025. If enacted, the implementation of these regulations is slated to commence on January 1, 2024.

The legislation came on the heels of a visit by legislative members to a cryptocurrency automated teller machine (ATM) in Sacramento. During the visit, they unearthed markups on certain cryptocurrencies that were as much as 33 percent higher than their values on cryptocurrency exchanges. A subsequent investigation by the legislators revealed that the fees levied by a cryptocurrency ATM oscillate between 12% and 25% on average.

Moreover, government authorities discovered ATMs with withdrawal limits soaring as high as $50,000, propelling them to initiate regulatory action to truncate such elevated premiums and withdrawal limits. With over 3,200 automated teller machines accepting Bitcoin dotted across California, as per Coin ATM Radar, the necessity for regulation becomes increasingly palpable.

An additional facet of the law mandates companies dealing in digital financial assets to obtain a license from the California Department of Financial Protection and Innovation by July 2025. The nature of transactions at crypto ATMs—exchanging physical cash for cryptocurrencies—has turned these kiosks into fertile grounds for frauds and exploitations, whilst also being a favored avenue for consumers to trade cash for their preferred cryptocurrency.

The lack of a substantial paper trail in each transaction, compared to traditional bank and wire transactions, further exacerbates the potential for fraudulent activities. Recently, numerous locals have been ensnared in scams where fraudsters persuade victims to deposit cash at nearby cryptocurrency ATMs in exchange for cryptocurrencies.

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California Governor Signs Digital Financial Assets Bill, Tightening Crypto Regulations from July 2025

On October 13, 2023, California Governor Gavin Newsom signed Assembly Bill 39, enacting the Digital Financial Assets Law, aimed at establishing a comprehensive regulatory framework for cryptocurrency activities in the state. Set to be effective from July 1, 2025, the law mandates the Department of Financial Protection and Innovation (DFPI) to devise a stringent regulatory structure encompassing licensure and enforcement mechanisms for certain cryptocurrency operations.

The Governor emphasized the importance of the new law in providing a robust foundation to manage the burgeoning digital assets market. The bill entrusts the DFPI with rulemaking authority, along with an 18-month implementation timeframe to ensure a meticulously crafted regulatory architecture in sync with evolving industry trends and aimed at consumer harm mitigation.

The law is a proactive attempt to bolster consumer and investor protections, thereby minimizing fraudulent activities and ensuring accountability of malicious actors within the digital asset domain.

Under the new law, individuals and businesses engaging in commercial transactions involving digital assets are required to obtain a licensure from the DFPI. This move aims to bring transparency and compliance within commercial operations concerning digital assets, aligning California with the broader regulatory trends seen in various jurisdictions.

The law references existing Californian legislation governing money transmission, which mandates licensing by the DFPI for banking and transfer services operating within the state. Extending this requirement to cryptocurrency transactions signifies a concerted effort to uphold regulatory standards in the face of a rapidly advancing digital asset ecosystem.

Interestingly, this development contrasts with Governor Newsom’s previous stance in 2022, when he chose not to sign a similar bill aimed at establishing a licensing and regulatory framework for digital assets. Despite the lack of opposition during its debate in the California State Assembly, the Governor had then returned the bill unsigned, citing the necessity for a more agile framework to keep pace with the swiftly evolving cryptocurrency sector.

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California’s FPPC Updates Campaign Disclosure Rules, Including Cryptocurrency Contributions

The California Fair Political Practices Commission (FPPC) has made significant updates to its campaign disclosure manuals, including the introduction of detailed rules for cryptocurrency contributions. These new guidelines were revealed in the FPPC’s August 2023 agenda.

Under the new rules, cryptocurrency contributions are subject to applicable limits and must adhere to specific requirements. Contributions in cryptocurrencies may not be accepted from foreign principals, lobbyists, or anonymous sources. They must be received through U.S.-based payment processors registered with the U.S. Department of Treasury and the Financial Crimes Enforcement Network.

Payment processors are required to convert cryptocurrency contributions to U.S. dollars at current exchange rates and deposit the funds into the committee’s campaign bank account within two business days. Cryptocurrency contributions are labeled as non-monetary contributions, and any processing fee paid to the processor is not deducted from the reported amount.

In other matters addressed by the FPPC, the ACLU of Northern California was found to have violated Government Code Sections, leading to a proposed penalty of $6,500. The violations included failure to disclose reportable activity and improper disclosure statements on an advertisement.

The Commission also presented Proposed Regulation 18318, which delegates the authority to the Executive Director to settle monetary penalties for a lesser sum. Guidelines on the circumstances that warrant a settlement were also outlined.

Furthermore, proposed amendments to Regulations 18531.1 and 18537.1 were discussed to address the return, transfer, or carry-over of campaign contributions when a candidate withdraws or does not run in an election.

Lastly, the FPPC provided an update on audit requirements, the audit process, FY 2022/23 audits, and common audit findings, reflecting the Commission’s ongoing commitment to transparency and accountability in political practices.

These updates mark a significant step in California’s efforts to regulate political contributions, including the emerging field of cryptocurrency, ensuring a more transparent and accountable political financing system.

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The California DMV is set to digitize car titles and title transfers

The Department of Motor Vehicles (DMV) in the state of California is conducting experiments with the use of a private Tezos blockchain to facilitate the digitalization of vehicle titles and title transfers.

The move is being made as part of a cooperation between the California Department of Motor Vehicles (DMV), the blockchain software company Tezos, and the blockchain software company Oxhead Alpha. Oxhead Alpha announced a successful proof-of-concept on January 25.

Oxhead Alpha has been contracted by the California Department of Motor Vehicles to build on a private Tezos testnet that the DMV has nicknamed a “shadow ledger.” Its primary purpose is to serve as a blockchain-based copy of the agency’s existing database, which has been its primary focus since its inception.

Ajay Gupta, the chief digital officer of the California Department of Motor Vehicles, told Fortune on January 26 that the department hopes to have the kinks worked out of the shadow ledger within the next three months.

After that, it intends to roll out apps such as digital wallets to keep and transfer nonfungible token vehicle titles, with the DMV serving as a mediator to monitor such processes. In addition to that, it is planning to roll out applications similar to the one described above.

According to an interview that Gupta gave to Forbes, “The DMV’s reputation of falling behind should surely alter.”

Andrew Smith, president of Oxhead Alpha, said that the California Department of Motor Vehicles’ (DMV) blockchain programme would serve a broad variety of use cases for the department, notably addressing the agency’s present paper-based systems and their eventual upgrade.

Smith gave many instances of fraudulent transactions, such as when automobile salesmen conceal essential information about the vehicle’s condition in order to sell a defective or “lemon” vehicle to purchasers who are not paying attention.

Smith pointed out that even while problematic autos in California have a special designation on their titles, dealers may easily relocate the vehicle to another state and conceal the faulty designations by doing so.

Smith said that it would be much simpler to monitor the true history of automobiles digitally if blockchain-based record keeping were used, in addition to the possibility that other DMVs might embrace the technology.

According to him, “this is a pretty apparent use case” for having a permanent digital title, which is one of the benefits of having such a title.

Smith explained in the company’s release on January 25 why Tezos was a good match for the DMV by stating that the blockchain “solves some of the very hard challenges in blockchain in an elegant manner.” Smith was commenting on why Tezos was a good fit for the DMV.

“The combination of responsible consensus, on-chain governance, and institutional grade security makes Tezos a perfect platform for providing production-ready solutions,” he added. “On Tezos, governance happens directly on the blockchain.”

The decision made by the California Department of Motor Vehicles is likely to be replicated by other governmental agencies in the state going ahead. In May of 2022, Governor Gavin Newsom of California issued an executive order to direct and investigate potential prospects for the integration of blockchain technology with state government institutions.

The governor said that “California is a worldwide powerhouse of innovation, and we’re setting up the state for success with this new technology.” This includes encouraging responsible innovation, safeguarding consumers, and harnessing this technology for the benefit of the public.

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California Cannabis Grower Using Blockchain For Tracking

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A cannabis nursery located in California has used blockchain technology and smart contracts in order to confirm the genuineness of the therapeutic plants they sell.

The cannabis nursery, which goes by the name Mendocino Clone Company, was given its moniker on January 13 in a statement about a cooperation between the EMTRI project and the technology company Global Compliance Applications.

To issue a batch certificate for each and every clone, also known as a baby plant, it will be necessary to make use of the capabilities offered by the blockchain project. Nurseries are businesses that focus on plant genetics and produce clones, young plants, and seeds for the purpose of wholesale distribution of cannabis. Nurseries may also be referred to as seed banks.

As a result of this decision, the nursery is now in a position to record the starting stages of a cannabis plant’s path to become a premium product for customers depending on the gram weight it blossoms, as the company said in a statement. Each clone batch has its own unique batch certificate, which functions as a self-generating smart contract. It does so by providing each young plant with its very own “unique identification block,” which is generated by the nursery and connected to the blockchain that it operates on using Ethereum.

It was noted that its customers, who include retail dispensaries and commercial farms, may utilize this to check the genetic history of their clones and determine whether or not their clones are real. Beginning the first week of February, a first round of batch certificate clones will be made accessible to the public.

Additionally, licensed farmers that acquire Mendocino clones will gain access to EMTRI token (EMT) awards and higher rates for engaging in the blockchain project. These benefits will be awarded to licensed cultivators who participate in the blockchain project.

In November of 2022, EMT was introduced as a means of providing incentives to project participants. The tokens may be staked for further dividends or exchanged on Uniswap for US Dollar Coins (USDC).

However, the idea of combining cryptocurrency with cannabis is not a novel one.

Cannaland, a cannabis-oriented Metaverse project, was initiated in November with the intention of developing a virtual environment catering to cannabis consumers and advocates. A bespoke pipe manufacturer produced tokenized bongs in January 2022, and celebrities such as Snoop Dogg and Santana were among the early adopters of the NFTs.

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California Gov Vetoes Digital Currency Licensing Bill

California Governor Gavin Newsom has vetoed Bill 2269 proposed by State Congressman Tim Grayson on the grounds that a more flexible approach is needed to address crypto regulations.

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The bill is originally billed to impress virtual currency service providers to obtain a license before they start operating in the state. The bill seeks to establish California as a state issuing BitLicense just like New York.

“It is premature to lock a licensing structure,” Newsom wrote in a recent letter to the California State Assembly. “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.”

Governor Newsom was also concerned about the financial implications of putting the Bill to work, which he noted the state was not prepared for at this time.

According to him, introducing a new regulatory approach is “a costly undertaking, and this bill would require a loan from the general fund in the tens of millions of dollars for the first several years. Such a significant commitment of general fund resources should be considered and accounted for in the annual budget process.”

California is one of the most forward-thinking states in America for crypto-related advancements. With the rise in the level of adoption of digital currencies in the state, Gov Newsom warned crypto users of the high rate of scams in the ecosystem back in March 2020. 

From issuing Executive Order to establish crypto regulations by Gov Newsom to introducing a crypto bill to measure the impact of digital assets on consumers. With the veto placed on Grayson’s Bill, the lawmakers will have to go back to the drawing board and take the advice of the governor, who is advocating for an alternative approach to handling crypto at this time.

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Campaigners In California Can Now Receive Donations in Cryptocurrency

California campaigners may now receive donations through Bitcoin (BTC) and other cryptocurrencies.

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The candidates for both local and state offices in the state can now breathe a sigh of relief as the state’s campaign regulator has lifted a four-year ban on crypto donations and contributions. 

According to the regulation document, there should be plans to receive any such donations through a payment processor. This will be registered with the United States Treasury Department under the Financial Crimes Enforcement Network (FinCEN).

Unanimously, the members of the California Fair Political Practices Commission voted to revoke the ban that had been active for years. Instead, they voted to develop new regulation that will supervise the activities of crypto donations. During the July meeting held by the commission, David Bainbridge the general counsel of the legal division mentioned that this is a new and ever-changing era for the western U.S. state. 

In addition, Bainbridge explained that a need to adjust the regulation may arise soon as development comes to the industry. In the meantime, he believes the current regulation will do justice to the inflow of crypto contributions without violating any law.

Receiving Crypto Donations Via the Payment Processor

The payment processor will be used to conduct know-your-customer (KYC) verification to ascertain the identity of every donor. Functioning optimally, the payment processor must retrieve personal contributors’ data like name, address, employer, and occupation.

The regulation states that “A person may make, and a committee may solicit, a contribution of cryptocurrency as an in-kind contribution if the cryptocurrency is converted to dollars upon the making of the contribution”. 

The contributions are expected to not exceed a limit that had already been stated. Every donation, once converted to U.S. dollars, should be transferred to the beneficiary campaign bank account within 24 hours of the time the contribution was made. The conversion will be done based on the prevailing exchange rate at that time. 

When reporting the crypto contributions, the reported amount will be the fair market value of the cryptocurrency at the time the donation was made to the payment processor.

Eventually, the California commission regulation will take its full course within the next 60 days.

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Blockchain startup sues Brian Armstrong for allegedly stealing its work

ResearchHub, a scientific research site founded and self-funded by Coinbase CEO Brian Armstrong, is allegedly based on work stolen from its not-launched competitor, a new court filing suggests.

Blockchain accelerator MouseBelt Labs filed on Dec. 17 a complaint with the Superior Court of the State of California, alleging that Armstrong’s ResearchHub has something to do with Knowledgr, a research platform in which MouseBelt had invested.

The filing alleges that Armstrong was offering investment in Knowledgr while secretly working on his own competing project, ResearchHub, in order to steal some of the resources that MouseBelt put into Knowledgr.

According to the filing, Knowledgr’s founder Patrick Joyce reached out to Armstrong in early 2019 after the Coinbase CEO laid out principles of “a possible open-source, scientific publishing platform” in an article in February. Armstrong reportedly became interested in Knowledgr and told Joyce that he might fund his own research site to be a competitor but might also invest in Knowledgr after learning more about it.

But according to the plaintiff, “this was all a ruse” as Armstrong had already been developing ResearchHub “for over six months” and “saw Joyce and Knowledgr as a dramatic time- and cost-saving hack.”

After leaving Knowledgr in April 2020, Joyce joined ResearchHub as the chief scientific officer in May 2020, according to his LinkedIn profile.

The filing argues that Armstrong’s ResearchHub is designed to with tokens in a similar way to Knowledgr. According to the plaintiffs, Armstrong also offered Knowledgr the opportunity to list their tokens on Coinbase, the largest cryptocurrency exchange in the United States.

The filing goes on to allege that Armstrong offered investment and listing opportunities to Knowledgr in the first place in order to destroy the potential competitor as well as steal from the project, stating:

“It was Armstrong’s and the other Defendants’ intent to steal MouseBelt’s work for themselves, to not only eliminate a potential competitor but to obtain for ResearchHub the benefits of the financial, design and technical resources MouseBelt put into Knowledgr, thereby allowing ResearchHub to launch sooner at less cost a successful platform based entirely or substantially on MouseBelt’s work.”

Coinbase and MouseBelt’s representatives did not immediately reply to Cointelegraph’s request to comment. This article will be updated pending new information.

Related: U.S. government goes to court over $11M USDT purportedly stolen by fake Coinbase rep

Based on the concept of Armstrong’s “Ideas on how to improve scientific research” post from early 2019, ResearchHub has a mission to accelerate the pace of scientific research by providing a “GitHub for science.” The open-source project allows researchers to upload articles while providing incentives for contribution using ResearchCoin (RSC), a newly created ERC20 token.

According to some of the latest posts from Armstrong, ResearchHub has been actively seeking contributors recently.