California "legalizes" bitcoin; but does it change anything?
Thursday 03 July 2014
It was business as normal for California’s Governor Edmund G. Brown Jr. on Saturday as he signed numerous bills into law. Included in those was AB-129, the law brought by Democrat Assembly member Roger Dickinson. Even though the law was not seen as a big deal for the Governor, it was a big deal for the crypto community.
Bitcoin made 'legal' in California
AB-129 is the bill that effectively makes bitcoin and other cryptocurrencies "lawful money" in California. Communications Director, Nicole Nabulsi at the Capitol in Sacramento told BitScan that, “The Governor signed a total of 15 bills into law, no one more important than the other.” When asked if there was a positive or negative public response to AB-129 being signed, Nabulsi said, “I wouldn’t say either really. I’ve had some questions from people about that particular law but I wouldn’t say there was a positive or negative response, just people inquiring about the signing in general.”
The law does not say exactly that cryptocurrencies, such as bitcoin and litecoin, are now lawful money, rather AB-129 was a repeal of Section 107 of the Corporations code that prohibited a corporation, association or even a person from issuing or putting into circulation, as money, anything but the lawful money of the United States.
See the details of the law below:
“The Section of the Corporations Code that the bill repealed has been removed from that Code,” Nabulsi said. That means that Governor Brown effectively legalized bitcoin, along with gift cards, reward points, coupons, and community bucks to be used as “lawful money” in the State of California.
Does anything change?
Though the headlines have promoted AB 129 as the legalization of bitcoin, it is not totally clear whether the Corporations Code that was repealed by AB 129 actually made bitcoin illegal In the first place. Section 107 of the California Corporations Code repealed by the bill read:
"No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States."
What did this part of the Corporations Code mean exactly? Described simply, before the Governor signed AB 129, it was considered illegal to do what many Californians were already doing, which was using in commerce "anything but the lawful money of the United States."
The law was put forth and signed so that now corporations, as well as individuals, won't be violating the law by issuing their own promotional bucks, gift cards and coupons or by using cryptocurrencies, such as bitcoin in commerce or daily transactions. What essentially has taken place is that the same activity that was probably already occurring on a daily basis, has been legalized. Previously, it technically was breaking Section 107 of the Corporations Code and many major ecommerce outlets were already ignoring this portion of the code.
As the bill's sponsor, Assemblyman Roger Dickinson, told the Los Angeles Times, "AB 129 merely legalizes existing practices." He added, “In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives.”
Seen below, the votes got stronger as the law passed through the phases on the way to the desk of Governor Brown.
Significance on a global scale?
Whether or not Section 107 even applied specifically to bitcoin is not important as that section has been effectively and legally removed. At State level, the signing of AB129 is just a little clearing of the brush that stands in the way of further acceptance of bitcoin as a legitimate currency. This means that if you want to pay your rent with bitcoin, and your landlord agrees to take bitcoin, it would be considered a legal transaction.
For a deeper look into the significance of this, you need only look at California’s economy when compared to the rest of the world. If California was considered a country, and compared to the rest of the world, it would rank 8th. California, Italy and the Russian Federation were in a virtual tie in 2012 for eighth-tenth place in the world rankings with a gross domestic product (GDP) of $2.0 trillion. According to World Bank estimates, following the recession of European economies, California moved closer to the GDPs of France and the United Kingdom and the State alone is responsible for 3% of the world’s total.
As a bitcoin pioneer, California is hoping to set the pace for the rest of the world and so the law change could perhaps signify a larger-scale change for the bitcoin economy. Ultimately, for bitcoin to become an accepted monetary unit, it first needs a certain level of universal acceptance. This law will only increase the use and acceptance of bitcoin and the continued use and acceptance will breed the same. Do you see anything that will stop this trend?
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