updated 01:37 pm EDT, Mon June 30, 2014
Currencies like Bitcoin, Dogecoin now legal to put into circulation in the state
Last week, California Governor Jerry Brown signed bill AB 129, regarding the definition of "lawful money," into law. The bill effectively ends a ban on alternative currencies in the state, meaning online currencies such as Bitcoin, Dogecoin and other cryptocurrencies can now be used in commerce transactions. The bill modifies California Corporations Code 107, which previously banned currencies that were "anything but the lawful money of the United States."
Previously, Corporation Code 107 indicated that "no corporation, flexible purpose corporation, associate or individual shall not issue or put in circulation, as money, anything but the lawful money of the United States." The passing of bill AB 129 clarifies the law, allowing alternative currencies - through the idea that the do not violate the law when used to purchase goods and services or other transactions. The Assembly Committee on Banking and Finance recognized that modern payment methods have expanded further than credit card and cash transactions.
The bill was introduced by Assembly Member Roger Dickinson, who recognized that digital currencies have grown in use. Citizens around the country have been freely utilizing alternative currencies from a number of sources, while Californians saw their use as a violation of law. Dickinson commented in early June about the bill's passing through the Assembly.
"In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives," said Dickinson. "This bill is intended to fine-tune current law to address Californians' payment habits in the mobile and digital fields."
The law is only a change in the way the currency is handled in the state, meaning that California will not offer any sort of regulation for any alternative currencies. In the past, the United States government has made no moves towards a full blown recognition of online currencies like Bitcoin, but has made them federally taxable as income. Businesses and trading operations are still required to register for securities trading if the cryptocurrencies are involved, as lawsuits earlier in the year indicated.
The new law may not change much for California residents, as the previous law banning alternative currencies weren't widely enforced. The full content of the bill as submitted to the California State Assembly Committee on Bank and Finance can be viewed at its website.