California Bill Would Make Bitcoin 'Lawful Money'

Update (GMT 23:11): The California Senate Banking and Financial Institutions Committee indicates that AB 129 is now roughly halfway through the process to become law.

Due to its position as a hotbed for technological innovation, California has thus far adopted a friendly stance toward its emerging bitcoin and virtual currency communities.

This attitude of encouragement, while noticeable in its vibrant startup scene, has been best displayed in the actions of its government, which this September revised net worth requirements for state money transmitters with the passage of Assembly Bill 786.

Now, following a 29th January vote in which it passed a final round of vetting by the California Assembly, California seems poised to broaden its definition of "lawful money" to include virtual currencies with the passage of AB 129.

Perhaps most notably, the vote in favor of the new proposal was unanimous, with 75 votes for and 0 votes against the bill.

AB 129 was introduced last January by California State Assembly member and Banking and Finance Chairman Roger Dickinson (who also introduced AB 786), and on 6th February was sent to the Senate Banking and Finance Committee for a review of its potential monetary impact before moving on to the Senate.

Notably, AB 129 would formally legalize a broad range of alternatives to the US dollar that are already widely in use:

The bill suggests that current state laws restrict the definition of money to the point where other forms of value, such as loyalty points or community currencies, are actually illegal under state law. As such, adverse actions taken against bitcoin, but not these equal alternatives under law, would represent a selective enforcement of the law.

The bill's most recent revision, issued 23rd January, allows people to issue any instrument of value that is "redeemable for lawful money of the United States or that has value based on the value of lawful money of the United States".

However, the bill would still give the US dollar precedent over alternatives, as it would "prohibit a person from being required to accept alternative currency".

Introduced in January 2013 first as a reform of the state's loan practices, the bill has taken a long road to the Senate Banking and Financial Institutions Committee. But, it has much further to go before it becomes law.

Explains a Senate Banking and Financial Institutions Committee spokesperson:

Now in the Senate, the bill needs to pass three stages, the Senate Policy Committee, Senate Fiscal Committee and finally the Senate floor. However, if at any point the bill should be amended in the Senate, its road could become even longer, as it would need to head back the Assembly.

Should this amended bill be approved, its next stop would be the state governor, who would decide whether the bill becomes law.

Image credit: California courthouse via Shutterstock