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June that modern methods of payment had expanded beyond cash or credit card, and that the AB-129 bill would repeal an outdated restriction on the use of any currency but the "lawful money of the United States".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