The California state legislature's effort to effectively legalize bitcoin — along side a host of other alternative stores of value — as forms of money cleared an important procedural stage on Wednesday as it moved closer to becoming law.
On 4th June, the California Senate Banking and Financial Institutions Committee voted overwhelmingly in favor of AB-129, the bill authored by Assemblymember Roger Dickinson that would recognize digital currencies, points and coupons, among other US dollar alternatives, as lawful money.
The 7-1 vote by the committee means the bill will move to the Senate floor for debate.
With the bill now heading to the Senate floor, bitcoin is one step closer to becoming a recognized lawful money in the largest state economy in the US.
Call for complete repeal
The latest version of the bill, amended on 22nd May in the Senate, calls for a complete repeal of Section 107 of the Corporations Code, which prevents companies or persons from creating unlawful forms of money.
Previously, the bill altered Section 107 to recognize bitcoin as “lawful money”, with a provision stating that individuals or businesses were not required to accept digital currencies as a form of payment. The bill still allows for the free use of bitcoin in the state, but the broader repeal opens the door for a variety of digital currencies.
Dickinson explained the purpose of the bill to CoinDesk when it first moved to the Senate for considerating:
"We’re not trying to deter or advance the development of alternative currencies. We’re trying to say that to the extent that alternative currencies are developed and in use, we will consider that to be a legally acceptable activity in California."
In March, Dickinson told CoinDesk that the effort was born out of a need to clarify the legal status of even long established alternative forms of value, which current California law doesn’t necessarily accommodate.
At present, regulators believe that changes are needed to current law to ensure that various forms of alternative currency do not violate the law when used for the purchase of goods and services or the transmission of payments.
Dickinson indicated that he saw bitcoin as worth of consideration among other, more established alternatives to money, stating:
"It wasn’t so much setting out to look at the issue of alternative currency, it was more evolutionary, leading into the breadth of the subject matter that suggested to us you couldn’t ignore alternative currencies."
Notably, the proposed law would not designate digital currencies as legal tender, rather as lawful money that may be accepted for goods and services.
Legal tender, by comparison, constitutes a federally sanctioned currency that can unquestionably be used to settle debts or obligations.
California state capitol building in Sacramento image via Shutterstock