California has taken a significant step towards recognizing and protecting Bitcoin and other cryptocurrencies as a legitimate form of payment and investment. Assembly Bill 1052 (AB1052), initially introduced in February, has been amended to include provisions that secure self-custody rights for digital assets and protect investors in the state.
The bill, championed by California’s Banking and Finance Committee chairman Avelino Valencia, now explicitly recognizes digital assets as a valid and legal payment method in private transactions for goods and services. It also prohibits public entities from restricting or taxing digital assets solely based on their use as a payment method.
One of the key backers of the bill, the Satoshi Action Fund, emphasized that once passed, nearly 40 million Californians will have the right to self-custody their digital assets without fear of discrimination. AB1052 also establishes a framework to handle unclaimed digital assets, preventing crypto funds from getting lost in bureaucratic limbo.
The legislation outlines that unclaimed digital assets will escheat to the state after three years of inactivity from the owner. The bill mandates that the holder of a private key for a digital asset account escheated to the state must transfer the digital asset to a custodian designated by the Controller. The Controller is required to appoint a custodian by January 1, 2027.
Furthermore, the bill expands the scope of the Political Reform Act of 1974 to prohibit public officials from issuing, sponsoring, or promoting digital assets, securities, or commodities. This move aims to ensure transparency and accountability in the digital asset space.
California’s efforts to advance crypto legislation come amidst a broader regulatory shift in the United States, with the Securities and Exchange Commission (SEC) adopting a less hostile approach towards the crypto industry. Several states, including California, have introduced bills to develop the industry and protect investors.
In addition to Assemblyman Valencia’s bill, California has seen other initiatives to create a clear regulatory framework for cryptocurrencies in the state. Lawmaker Tim Grayson introduced Senate Bill 97 (SB97) to provide guidelines for Stablecoin approval by the Commissioner of Financial Protection and Innovation.
Meanwhile, Arizona is also making strides in crypto legislation, with a bill aiming to expand the state’s definition of legal tender to include cryptocurrencies like Bitcoin. The state is also leading the way with Strategic Bitcoin Reserve (SBR) bills awaiting a final vote by the full House of Representatives.
Overall, California’s move to recognize Bitcoin and crypto rights in the digital assets bill signals a positive step towards mainstream acceptance and regulation of cryptocurrencies in the state. With the crypto industry rapidly evolving, clear and comprehensive regulations are essential to protect investors and foster innovation in this emerging sector.