California Legalizes Bitcoin and Other Cryptocurrencies

The ‘mainstreaming’ of Bitcoin continues. Last Saturday California governor Jerry Brown signed a law that removes a ban on using ‘currencies other than the US dollar’. The law was promulgated due in large part to the growing popularity of Bitcoin and other cryptocurrencies. Before the repeal of Section 107 of California’s Corporations Code any number of transactions were technically prohibited but not enforced under the law from the use of Starbucks reward stars to grocery store rewards points.

Assembly Member Roger Dickinson introduced the bill to not only ‘de-criminalize’ Starbucks cards users put to allow California residents to legally use Bitcoin. The new law is very short–just over 30 words long–but could have far reaching implications for Bitcoin and the Bitcoin market. From a symbolic standpoint, it’s another regulatory validation of Bitcoin and cryptocurrencies. From a practical standpoint, it establishes California–home to Silicon Valley–as a safe haven for companies looking to advance Bitcoin and the underlying technologies. As California struggles with huge budget deficits and other economic problems it’s also a solid proactive move to help facilitate new industries, jobs and investment in the Golden State. Bitcoin is never mentioned in the legislastion though Assembly Member Dickinson’s primary rationale for introducing it is the fact that “it is impractical to ignore the growing use of cash alternatives.”

This is the latest in a string of regulatory validations for Bitcoin. Earlier this year the IRS indicated that Bitcoin would be treated as ‘property’ for tax purposes. Great Britain also formalized tax rules for dealing with the cryptocurrency. Financial information outlets continue to add information about Bitcoin and pricing and not too long ago Apple reversed policy and allowed Bitcoin apps to be listed in the App Store. Of course the most significant strides are being made by the private sector which is growing increasingly hospitable to transactions conducted in Bitcoin.

As the status quo financial institutions continue to embrace–or at least tolerate–Bitcoin it adds to the possibility that a more mainstream adaptation of it is on the horizon. While it has the potential to radically alter the banking and money transfer landscape worldwide for the time being most companies are working with Bitcoin and not against it.