California's legislature cleared the way for bitcoin to function as a payment method for goods and services starting January 1st. The state had operated under Section 107 of the Corporations Code, a p
California's legislature cleared the way for bitcoin to function as a payment method for goods and services starting January 1st. The state had operated under Section 107 of the Corporations Code, a provision that restricted payment to "legal money" only. That language created an awkward situation for gift certificates, store loyalty programs, and other tokens that fell outside the law's boundaries.
The legislation, known as AB129, passed in June 2014. With its effective date now reached, Californians can conduct transactions with bitcoin and other cryptocurrencies without legal obstacle.
New York and other states are charting a different course. The state's Department of Financial Services continues developing a regulatory framework that would require financial intermediaries to obtain a BitLicence to operate. The DFS framed the approach as essential for consumer protection, anti-money laundering compliance, and preventing terrorism financing.
Opponents characterized the requirements as surveillance overreach. BitPay, a major payment processor, warned that the licensing structure could make compliance too expensive for smaller companies. The original proposal demanded that every individual using bitcoin secure a license, and anyone sending money would need to record the names and addresses of recipients. Regulators dropped those provisions, recognizing how impossible they would be to execute.
California itself has not signaled whether it plans to impose its own regulatory layer atop AB129. Tom Dresslar, speaking for the state's Department of Business Oversight, stated that the agency would reach a decision "in the near future." California hosts a significant cluster of cryptocurrency startups and payment processors, making the state's regulatory posture consequential for the industry.
Across borders, governments wrestled with how to treat digital currencies. Britain's Treasury views bitcoin as money and has indicated support for innovation alongside protective measures, though it has not finalized rules. Australia classified bitcoin as something other than money, making it subject to income taxation when generated through mining. That classification prompted at least some firms to wind down Australian operations. The European Union weighed similar taxation questions and moved in Australia's direction.
Bitcoin's legal standing remains unsettled. Authorities tend to distrust decentralized systems, and the industry's future will depend on how governments choose to regulate, comprehend, and monitor its activity.
