California Adds Bitcoin (BTC) and Crypto Rights to Digital Asset Bill

California's Banking and Finance Committee chairman, Avelino Valencia, has added Bitcoin and crypto investors' protections to his digital assets bill.

California lawmakers are making moves to introduce Assembly Bill 1052 (AB1052) that recognizes digital assets as a payment method, enforces self-custody rights, and provides investor protection, according to a report by The Block.

A bill aiming to recognize cryptocurrencies as a valid payment method and provide investors with fundamental rights has been amended to include provisions for Bitcoin (BTC) and broader crypto asset protections.

Assembly Bill 1052 (AB1052), initially introduced in February by Avelino Valencia, Democrat lawmaker for the 40th Assembly District and chairman of the Banking and Finance Committee, was focused on securing self-custody rights for the state’s residents.

However, on March 28, the Democrat lawmaker introduced the amended bill, changing its name from the “Money Transmission Act” to “Digital Assets” and shifting its focus to explicitly recognize digital assets as a “valid and legal” payment method in private transactions for goods and services.

It also prohibits public entities from taxing or restricting digital assets solely based on their use as a payment method.

The Satoshi Action Fund, which backed the bill, said that once passed, this legislation will guarantee nearly 40 million Californians the right to self-custody their digital assets without fear of discrimination.

The bill also established a framework to handle unclaimed digital assets to prevent crypto funds from getting lost in “bureaucratic limbo,” as the fund noted.

Unclaimed Property Law provides that all intangible personal property of an apparent owner escheats to the state if, for more than 3 years after it becomes payable or distributable, the apparent owner has not taken specified actions showing an interest in or control of the property.

The bill states that intangible property held in a digital asset account will escheat to the state 3 years after either written or electronic communication to the owner is returned undelivered, or the date of the last exercise of ownership interest, as defined, by the owner.

It further stipulates that the holder of a private key for a digital asset account escheated to the state will transfer the digital asset to a custodian designated by the Controller. The bill adds that the Controller will appoint a custodian no later than January 1, 2027, as specified.

Lastly, the bill expands the scope of the Political Reform Act of 1974 to prohibit a public official from issuing, sponsoring, or promoting a digital asset, security, or commodity.

The move comes amid a broader shift in the US, with the Securities and Exchange Commission (SEC) adopting a less hostile approach toward the crypto industry and several states introducing a slew of crypto-related bills to develop the sector and protect investors.

Earlier this month, another Californian lawmaker, Tim Grayson, introduced Senate Bill 97 (SB97) to amend the Digital Financial Assets Law to provide more comprehensive guidelines for Stablecoin approval by the Commissioner of Financial Protection and Innovation.

The bill expands the existing evaluation criteria, which already include examining the issuer’s legally enforceable rights, redemption assets, potential risks, and representations about the stablecoin’s uses.