California Just Green-Lit Bitcoin Payments for State Fees—Here's What Actually Changes

In a 68-0 landslide, California’s Assembly passed AB 1180 on June 4, clearing the way for the state to accept Bitcoin and other digital assets for government payments. It’s officially headed to the Senate.

What’s actually happening: The bill establishes a pilot program under the Department of Financial Protection and Innovation (DFPI) to test crypto payments for state fees. The kicker? There’s a sunset clause—the whole thing expires July 1, 2031. By January 1, 2028, DFPI has to report back on transaction volumes, the technical headaches they hit, and whether this should expand beyond the pilot.

The regulatory side: Califirnia’s introducing the Digital Financial Assets Law (DFAL)—basically a licensing framework for anyone handling digital assets. No license, no business. The rules go live July 1, 2025. Plus, stablecoin issuers and exchanges handling CA transactions need to keep 5-year records and get licensed or partnered with a bank.

Why this matters: Assemblyman Avelino Valencia (who sponsored the bill) called it a first-of-its-kind move, and he’s not wrong. Colorado, Utah, and Louisiana already accept crypto, but California’s the heavyweight. The state’s betting this positions it ahead of the curve on payment modernization.

The catch: Here’s where it gets messy. Unlike the simple “accept Bitcoin” narrative, California will need a payment processor to convert crypto to dollars before it hits the state treasury—same setup Colorado uses with PayPal. That means transaction fees eating into the deal. The California Blockchain Advocacy Coalition flagged this: PayPal charges $1 flat plus 1.83% per transaction. So the state isn’t exactly pocketing pure crypto.

Previous crypto payment bills in California (AB 953, AB 3090, SB 1275) all failed. This time, they’re framing it as a test-and-learn pilot rather than a full rollout, which apparently made the difference. The Assembly wasn’t messing around—unanimous vote.