SACRAMENTO, Calif. (1/8/15)--Bitcoin, the controversial digital currency, can be accepted and used for transactions in California following the passage of new legislation.
The ratification of AB129 does not obligate vendors to accept the cryptocurrencies---it ensures that "various forms of alternative currency such as digital currency" will be legal in purchasing goods and transmitting payments. Still, the measure is a step forward for cryptocurrencies, which have faced scrutiny from regulators (Banking Technology Jan. 5).
While bitcoin use is now legal in California, it is not technically legal tender, a status reserved for and defined federally as "United States coins and currency" under the Coinage Act of 1965 (TIME Jan. 7). The IRS clarified in March that bitcoin functions more like property than currency, which means that taxes applying to property transactions also apply to bitcoin transactions.
"In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives," Assemblyman Roger Dickinson (D-Sacramento), the bill's author, said in a statement.