California Passes “Bitcoin Rights Bill,” Eliminating Tax Restrictions For Payments

• California’s AB 1052, the Digital Financial Asset Law, to be effective on July 1, 2025. 
• This bill aims to protect the self-custody of individuals who hold personal digital assets. 
• It also regulates unclaimed digital assets, positioning California as a leader in crypto laws. 

California has made headlines with its recent legislative move, named the “Bitcoin Rights Bill.” This bill is aimed at safeguarding individuals’ rights to manage their own digital assets. Bill AB-1052 was initiated by Assembly Member Juan Carrillo Valencia, Chair of the Banking and Finance Committee. It was first signed by California Governor Gavin Newsom on October 13, 2023, joining Louisiana and New York. Official confirmation of the bill’s introduction came on March 30 through an X post from a non-profit organization, Satoshi Action Fund.

The bill ensures that individuals are not required a license to hold digital assets, thereby protecting their self-custody. Individuals can self-custody their Bitcoin while prohibiting public agencies from imposing taxes or restrictions based on asset use in payments. However, the bill prohibits businesses from engaging in digital financial asset business activity without obtaining a license from the California Department of Financial Protection (DFPI), including transmitting, exchanging, or storing digital assets on behalf of another person. 

A separate section of the bill talks about the legal process for handling unclaimed digital property, ensuring such assets are secured by licensed custodians instead of being left in administrative uncertainty. Apart from individual usage, the bill also outlines key features like consumer protection measures, licenses to make pre-activity disclosures like scheduling fees and charges, insurance protection, and error resolution rights. While the bill doesn’t directly address penalties for individual crypto payments, its regulatory framework for business reduces the risk of unfair practices. 

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The AB 1052 stands as an innovative piece of legislation for California, positioning the state as a leader in digital asset regulation. The bill’s effective date of July 1, 2025, is set to begin a transformation period in the digital assets landscape. Further, analysts suggest that the adoption of the AB-1052 bill could serve as a turning point for other state jurisdictions to pursue similar measures. Another event in the digital asset sector is to take place in July, the Wyoming state-backed stablecoin. These actions from the governments signify a growing momentum toward regulatory clarity.

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