California Bill Proposes Protections for Crypto Payments and Self-Custody

An amended California bill, Assembly Bill 1052, is currently awaiting its first reading in the state legislature, introducing significant protections for digital asset payments and self-custody. On March 28, the bill, originally titled “Money Transmission Act,” was renamed to “Digital Assets” after revisions were made by California’s Banking and Finance Committee chair, Avelino Valencia. These revisions shifted the bill’s focus to provide broader protection for digital asset users and businesses.

If passed, the bill would make it legal for individuals and businesses in California to accept payments in digital assets for goods or services. This would ensure that digital assets used in private transactions are recognized as valid legal consideration. While public entities would not be required to accept digital assets as payment, they would be prohibited from imposing restrictions or taxes purely on the basis of crypto’s status as a payment method.

The bill also includes provisions protecting crypto self-custody. It would prevent public entities from placing limits on the use of hardware or self-hosted wallets for managing digital assets, ensuring that individuals maintain full control over their crypto holdings.

Another notable part of the bill addresses unclaimed property laws. If a digital asset account goes untouched for three years, it would be required to escheat to the state, with the asset being transferred to a state-designated custodian. The bill also proposes an extension of the state’s Political Reform Act to prevent public officials from issuing, sponsoring, or promoting digital assets, thereby avoiding conflicts of interest in their public duties.

The bill comes at a time when crypto adoption in California is gaining political support. For example, State Senator Ben Allen recently backed a pro-Bitcoin candidate, Dom Bei, running for a seat on CalPERS. Additionally, a recent study found that nearly 80% of California’s crypto holders would support a pro-crypto political candidate, signaling growing political backing for digital assets in the state.

As AB 1052 progresses through the legislature, it represents a significant step toward protecting the rights of crypto users in California and ensuring the state remains a key player in the growing digital asset landscape.