- California lawmaker introduces amendment to protect residents’ right to use cryptocurrency as payment method.
- The Digital Assets Act would prohibit state entities from restricting crypto payments and explicitly affirms self-custody rights.
- The legislation also prevents public officials from promoting digital assets and applies unclaimed property laws to cryptocurrencies.
Democrat assembly member Avelino Valencia has introduced an amendment to California’s Money Transmission Act that would protect state residents’ ability to use cryptocurrencies for payments. The amendment, filed on Friday, renames the legislation as the Digital Assets Act and adds several provisions protecting cryptocurrency usage in California.
The original bill, introduced by Democrat Senator Laura Richardson on February 20, primarily focused on requiring digital wallet providers to implement security measures like two-factor authentication. Valencia’s amendment significantly expands the bill’s scope by authorizing individuals and businesses to accept cryptocurrencies as payment for goods and services.
According to Dennis Potter, CEO and co-founder of the Satoshi Action Fund, the amendment “explicitly affirms the right of individuals to self-custody their Bitcoin and digital assets.” This ensures Californians can manage their cryptocurrencies independently without being forced to use centralized custody services.
New Protections and Restrictions
The amended legislation prohibits public entities from imposing restrictions on cryptocurrency payments and prevents the state from taxing crypto when used to pay for goods and services. Potter told Decrypt that these provisions “introduce new legal protections and frameworks that were not previously codified in California law.”
Additional provisions apply California’s Unclaimed Property Law to cryptocurrencies, requiring exchanges to transfer assets to the state if customers remain inactive for at least three years. The bill also extends the Political Reform Act of 1974 to digital assets, prohibiting public officials from “issuing, sponsoring, or promoting a digital asset, security, or commodity.”
Growing Movement for Crypto Rights
The Satoshi Action Fund has championed the bill, stating that its passage would protect self-custody rights for “nearly 40 million Americans.” The non-profit Bitcoin advocacy organization, founded by former alumni of the first Trump administration, has been instrumental in encouraging states to adopt pro-cryptocurrency legislation.
The organization recently helped pass similar legislation in Kentucky establishing self-custody rights and clarifying that mining and staking rewards are not securities. They also influenced discussions regarding a Bitcoin strategic reserve bill in Oklahoma.
Potter believes California’s legislation “reflects a broader shift” in the US toward integrating cryptocurrencies into existing financial systems. As the fifth-largest economy in the world, California’s regulatory approach could influence other jurisdictions to develop frameworks that both protect consumers and support innovation in digital assets.
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