California Likely to Legalize Bitcoin

The state of California is set to legalize bitcoin and other digital currencies as “lawful money.”

Banking and Finance Chairman, Roger Dickinson, introduced Assembly Bill 129 (AB 129) to the California Assembly in January.

Under current California laws, digital currencies and other stores of value including rewards and loyalty points, along with “community currencies” can be considered illegal.

According to California’s Corporations Code 107 usage of “anything but the lawful money of the United States” is prohibited. It would be unjust to selectively take action against bitcoin while allowing the usage of other stores of value like loyalty points so AB 129 is a necessary measure for any future legal action.

Corporations Code 107 is an obviously outdated law and a legalization of digital currencies could certainly strengthen the already sizable technology sector in California.

AB 129 was voted for in favor unanimously, and is halfway in the process of being made into law, so there is a strong chance of it becoming official.

Investors and digital currency startups alike have expressed frustration about the lack of clarity when working in this space. California’s initiative could make the state the first to officially recognize digital currencies and legalize bitcoin. This could pave the way for a host of California-based startups, exchanges, and other innovations.

Somewhat more exciting for the state would be the possibility of taxing digital currencies, though that would entail the tricky business of concretely defining what categories bitcoin and digital currencies fall into.