California has taken a significant step towards embracing cryptocurrency after Assembly Bill 1180 (AB 1180), which proposes allowing state departments to accept digital currencies for payments, successfully passed the State Assembly. The bill received unanimous approval with a 68-0 vote during its third reading on June 2 and will now proceed to the Senate for further consideration. This development signals a growing openness to digital financial assets within the state's legislative bodies.

AB 1180 mandates the Department of Financial Protection and Innovation (DFPI) to establish regulations under the Digital Financial Assets Law (DFAL). These rules would permit state fees and transactions to be payable in cryptocurrency. The DFPI is California's primary regulatory body responsible for overseeing financial services, consumer protection, and fostering responsible innovation. Entities conducting crypto-related business activities within the state are already required to obtain a license from the DFPI.

Should AB 1180 navigate the Senate successfully and receive Governor Gavin Newsom's signature, it is slated to become effective on July 1, 2026. According to the bill's sponsor, Democratic Assemblymember Avelino Valencia, a pilot program is planned to run until January 1, 2031, at which point the system would become fully operational. If enacted, California could join other states like Florida, Colorado, and Louisiana, which have already implemented measures to accept crypto payments for certain state obligations in recent years.

As part of its provisions, AB 1180 requires the DFPI to submit a comprehensive report by January 1, 2028. This report will detail all cryptocurrency transactions processed by state agencies, along with any technical and regulatory challenges encountered during the implementation. Under the DFAL, crypto transactions are defined as any digital representation of value used as a medium of exchange that is not legal tender. Prior to its passage in the Assembly, AB 1180 underwent four amendments, with a notable exclusion being a section initially intended to define terms related to ride-sharing companies and personal vehicles used for transportation services.

Complementing AB 1180 is another piece of legislation, Assembly Bill 1052 (AB 1052), often referred to as the state’s “Bitcoin rights” bill. This bill is primarily focused on delineating crypto self-custody rights for California's nearly 40 million residents. AB 1052 achieved a significant milestone on May 23 when it passed its first assembly committee with a unanimous 11-0 vote and has since been ordered to a third reading.

AB 1052 further aims to validate the use of a digital financial asset as a legal form of payment in private transactions. It also seeks to prohibit public entities from imposing restrictions or taxes on digital assets solely based on their use as a medium of payment. Currently, data from BTC Maps indicates that 117 merchants across California accept Bitcoin payments, highlighting a growing, albeit modest, adoption at the grassroots level. The progression of these bills indicates a growing legislative interest in formally integrating digital currencies into California's economic framework, addressing both state-level transactions and individual rights concerning crypto assets.