By Nicole Arce, Tech Times | June 30, 9:39 AM
The state of California has taken a 180-degree shift in opinion on digital currency almost one year after it ordered the Bitcoin Foundation to stop trading or else face hefty fines; it now has a law that makes the use of bitcoin and other cryptocurrencies legal.
Governor Jerry Brown signed Saturday into law AB 129, a bill authored by Democratic assemblyman Roger Dickinson, which reverses a previous law that declared illegal use of other currencies other than the U.S. dollar, which bitcoin backers composed largely of major companies based in San Francisco Bay Area's Silicon Valley, have considered outdated.
Earlier this month, Dickinson said AB 129 addresses the shifting payment habits of Californians, which are increasingly turning towards cash alternatives such as Amazon Coins and Starbucks Stars. The law, he says, is intended to reflect evolving payment methods used in the mobile and digital worlds.
"This bill makes clarifying changes to current law to ensure that various forms of alternative currency such as digital currency, points, coupons, or other objects of monetary value do not violate the law when those methods are used for the purchase of goods and services or the transmission of payments," writes [pdf] Mark Farouk, who drafted the law.
The new law, however, does not provide regulations for the issuance and circulation of bitcoin. The task will fall on the shoulders of the California Department of Business Oversight, which warned citizens about the disadvantages of investing in digital currencies in April.
This comes only a few days after the court issued approval to begin bankruptcy hearings for Mt. Gox, once the most successful exchanges for trading digital currency. The five-year-old Tokyo-based Mt. Gox is going through a very rocky road after chief executive Mark Karpelès announced that the exchange lost some 750,000 bitcoins in traders' money and another 100,000 bitcoins of its own to cybercriminals. All in all, the 850,000 bitcoins lost are equivalent to $500 million.
"There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble," said Karpelès at a news conference after the exchange filed for bankruptcy.
However, things appear to be looking up for bitcoin and other alternative currencies, which are sometimes used as a form of protest against current U.S. financial policies. Earlier this month, Apple announced that it will be allowing developers to create bitcoin wallets and apps that use bitcoin to pay for in-app purchases. The first Apple App Store app to use bitcoin as a currency is eGifter, a shopping app that allows users to download gift cards for themselves or send to their friends.
Google and Yahoo have also acknowledged bitcoin after adding the digital currency to their finance networks. Currently, Google lists 1 bitcoin as equivalent to $628.6195.