SACRAMENTO (CBS SF) — Governor Jerry Brown signed a law last week legalizing currency other than U.S. dollars, opening doors for digital currencies like Bitcoin, Ripple, Peercoin and Primecoin to be used for transactions across California.

Written by Democratic Assemblyman Roger Dickinson, AB 129 “is intended to fine-tune current law to address Californians’ payment habits in the mobile and digital fields,” he said in a statement. “In an era of evolving payment methods, from Amazon coins to Starbucks stars, it is impractical to ignore the growing use of cash alternatives.”

WATCH: An Explanation Of How Bitcoins Work

Canada became the first country last week  to officially treat Bitcoins like cash.

Although digital currencies are gaining traction across the coutnry, the IRS says Bitcoin is not legal tender and cannot be used to pay your taxes. However, if you receive wages in Bitcoin, you have to pay taxes on it just like you would if you got paid in dollars.

California Lt. Gov. Gavin Newsom is among the first big-name politicians to accept campaign donations in the peer-to-peer payment system, which is not controlled by a single entity and can be sent electronically, with payments recorded in a public ledger.

The arrival of Silicon Valley’s first Bitcoin ATM in Mountain View in March was viewed as an attempt to make the cryptocurrency a household name. The machine returns Bitcoin numbers on deposits of ordinary, government-backed currency.

Meanwhile, the Federal Government Accountability Office released a report calling for more consumer protection for people who use virtual currency.




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