California repeals law banning bitcoin

California repeals law banning bitcoin

Summary: Californian lawmakers have signed a bill removing the prohibition of companies or individuals from issuing money other than US dollars, rendering bitcoin technically legal in the state.


Californian Governor, Jerry Brown, has signed a bill making bitcoin legal in the state, along with other forms of money issued by companies, including Amazon Coin and Starbucks Stars.

On Saturday, Brown signed a bill repealing Section 107 of California's Corporation Code, which prohibited companies or individuals from issuing money other than the "lawful money of the United States".

While Section 107 was generally not enforced, it rendered bitcoin technically illegal in the state, along with other forms of non-government tender such as cryptocurrencies.

The bill, AB-129, was first introduced by California assemblyman, Roger Dickinson, in January last year. At the time, Dickinson was the chairman of the Banking and Finance committee.

According to information on the California Legislative Information website, the bill was passed in the Senate on 19 June with a 7-1 vote and enrolled on 24 June.

Dickinson said in a statement published on 23 June that modern methods of payment had expanded beyond cash or credit card, and that the AB-129 bill would repeal an outdated restriction on the use of any currency but the "lawful money of the United States".

"In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives," Dickinson said. "This bill is intended to fine-tune current law to address Californians' payment habits in the mobile and digital fields."

The move comes as Japan's ruling Liberal Democratic Party drops bitcoin regulation plans, following the collapse of Tokyo-based Bitcoin exchange, Mt. Gox. The exchange went under after discovering the theft of around 850,000 bitcoins in its possession in February.

Meanwhile, the Chinese government has taken a hardline approach to the proliferation of bitcoin trading, demanding that all banks and payment service providers cease their dealings in the digital currency.

Although Australia's first bitcoin ATM was launched in Sydney during April, the Australian Tax Office (ATO) is yet to complete formulating new rules for the taking of cryptocurrencies such as bitcoin and litecoin.

According to documents obtained under Freedom of Information law by the ABC, the agency has been keeping a close eye on cryptocurrencies as far back as 2012, but only in January this year had the organisation started forming an official taskforce to investigate bitcoin.

Topics: Emerging Tech, Banking, Government US


Leon covers enterprise technology and start-ups from ZDNet's Sydney newsroom.

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  • This is unconstitutional

    And explicitly so.

    Article I Section 10: “No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts…”
    • That would include...

      the southern civil war scrip money, the greenback, the 1913 Federal Reserve Act, Nixon Shock...
      I believe the Supreme Court upheld legal tender, paper money... they should get to electronic money soon.
      "However, the states cannot coin money themselves" I think is still verboten.
      • It said "state"

        Greenbacks and the Fed are Federal government actions. The clause I cited refers to states. (And Confederate $ obviously were printed by traitors so that's got nothing to do with anything.)
      • States coining money...

        ...or issuing bills of credit (aka paper money) is explicitly prohibited, per Article IV of the US Constitution.
        John L. Ries
    • Apparently...

      ...the law doesn't say that Bitcoin has to be accepted as payment; it merely removes the prohibition against using media of exchange other than the US Dollar.

      Federal Reserve notes and US coins, however, remain legal tender per federal law.
      John L. Ries
  • You are right, however, it's not unconstitutional

    I'm borrowing here: "Note that the words specifically state “make.” That word means no State can forcibly demand payment in anything other than gold or silver. However, note carefully that the Constitution makes no mention of other possible forms of voluntary payment. Nor should there be any mention in a free enterprise society. That is, if a person offers payment in a form or substance other than gold or silver, the State can certainly accept such payments. Indeed, in the early days of the nation when currency was in short supply, payments were often made in actual goods and services. "
    • Who said anything about California accepting Bitcoin as payment?

      Nothing in the article. As far as I know, the State of California itself will still only accept payment in "Lawful money of the United States"; but others are allowed to make their own decisions.
      John L. Ries
  • Interesting, but flawed

    Bitcoin and other "crypto-currencies" are an interesting concept, but to really be useful, money must be stable. In an industrial society, where investment is critical, a small but steady rate of inflation encourages people to invest their money rather than hiding it in the mattress. And for a wage-earner, it's critical to know that the wages you received for your labor this week will have the same value next week when you go to the store to spend it on groceries.

    Bitcoin is so volatile that there's no way to know if this week's wages will be worth ten times the value next week, or one-tenth the value. Who would want to accept such payment? Answer: a gambler. Nobody else.

    Then there are taxes. Nobody likes to pay taxes, but without taxes we would not have garbage collection, schools, libraries, police, etc. When people turn to crypto-currencies to avoid taxes they are setting themselves up for a grand battle with the government. And in such struggles, the government wins.

    Conclusion: Bitcoin is a fascinating idea, but unless it can find a way to stabilize its value, it will be useless; and unless it can be taxed, the government will obstruct it at every turn.