The California State Assembly unanimously passed a bill, AB 1180, on June 4 with 68 votes in favor, allowing the state government to accept Bitcoin and other digital assets as payment methods. The crypto payment bill is now under review by the state Senate.
The bill requires the Department of Financial Protection and Innovation (DFPI) to submit a report to the Legislature on or before January 1, 2028. The report should contain the number and value of cryptocurrency transactions processed, the technical and regulatory challenges encountered, and recommendations for payments under other laws and to other state government agencies to be made using digital financial assets. According to official documents, the bill will sunset on July 1, 2031.
Crypto payment bill aims to modernize state payment solutions
🇺🇸 JUST IN: California Assembly passes bill to allow the state to receive payments in Bitcoin and digital currencies.
It passed 68-0, and now heads to the Senate. pic.twitter.com/3JWXlpuEWh
— Bitcoin Laws (@Bitcoin_Laws) June 3, 2025
The legislation establishes the Digital Financial Assets Law (DFAL), which is a licensing and regulatory framework administered by the DFPI for digital financial asset activity. The bill also prohibits an individual from engaging in digital financial asset business activity without a license from DFPI on or after July 1, 2025.
Member of the State Assembly Avelino Valencia, who presented the bill, acknowledged that it was a first-of-its-kind initiative. He noted that the AB 1180 bill would establish a pilot program authorizing the Department of Financial Protection and Innovation (DFPI) to allow for the payment of fees using digital finance assets.
“Very excited about this. Having gone to school at San Jose State during the time that this technology was being created, I firmly believe this will be fully integrated into our society in the near future.”
– Avelino Valencia, Member of the California State Assembly.
Valencia championed the initiative, emphasizing its strategic importance in modernizing payment systems. Bitcoin advocate and political strategist Dennis Porter welcomed the Assembly’s move as a significant milestone in cryptocurrency acceptance in government transactions.
Valencia noted that AB 1180 requires a licensee to maintain specific records related to digital financial asset business activity with a California resident for five years after the date of the transaction. It also prohibits a covered person from exchanging, transferring, or storing a stablecoin or engaging in digital financial asset administration unless the issuer of the stablecoin is a licensee, a person who applies for a license, a bank, or a California or federal trust.
The legislation also provides that specified sections of the DFAL related to disclosures, consumer protections, and stablecoin requirements will be operative on July 1, 2025. According to Valencia, AB 1180 will ensure that the process and challenges of paying state fees with cryptocurrencies can be studied and improved upon. He also expects the bill to keep pace with evolving consumer preferences since Colorado, Utah, and Louisiana already accept crypto payments.
Legislation faces hurdles in converting crypto to fiat
We are getting a payment provider to accept crypto equivalent and deposit the dollars into the state’s treasury for that amount. It is kind of like credit card payments, with the bonus that there are no returned payments! pic.twitter.com/H8MaFV1ojE
— Governor Jared Polis (@GovofCO) February 23, 2022
The California Blockchain Advocacy Coalition argued that all states accepting cryptocurrency convert it into dollars using a payment processor, which adds additional charges. The coalition noted that Colorado uses PayPal payment processing, which charges a $1 service fee to convert crypto into dollars, plus 1.83% of the payment amount, and requires the use of PayPal Currency Hub.
The trade association noted that the State of California is not set up to accept digital asset payments. It also acknowledged that there is no mechanism to convert cryptocurrency payments to dollars, which is the basis of the state budget.
Previous legislation allowing the use of cryptocurrency for state payments failed. The bill includes AB 953, which requires the California Department of Tax and Fee Administration to accept stablecoins for tax payments from licensed cannabis businesses. The legislation was referred to Assembly Banking and Finance and Revenue and Taxation but was gut and amended related to land use.
The AB 3090 bill requires the California Department of Tax and Fee Administration to issue and deliver to the Legislature a report on how the state, cities, and counties could receive any cannabis tax amounts through stablecoin transactions but failed to go through. SB 1275 also authorizes a state agency to accept digital assets as a payment method to provide government services. The legislation failed to pass out of the Senate.
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