The California State Assembly has made a groundbreaking move by unanimously passing AB 1180, a bill that paves the way for state agencies to accept Bitcoin and other digital assets as payment for specific regulatory fees. This legislation, introduced by Assemblymember Avelino Valencia (D-Anaheim), received overwhelming support on June 3 with a decisive 78-0 vote (2 NV) and is currently being reviewed by the Senate Rules Committee.
If approved, AB 1180 would mandate the Department of Financial Protection and Innovation in California to establish guidelines that permit businesses governed by the state’s Digital Financial Assets Law to pay licensing and examination fees using digital assets. The proposed pilot program is set to launch on July 1, 2026, and will run until January 1, 2031.
Assemblymember Valencia expressed his enthusiasm for the bill, stating that “AB 1180 puts California at the forefront of digital-asset innovation,” during a previous committee hearing. He believes that this legislation will serve as a blueprint for integrating digital assets statewide.
California’s initiative follows the lead of states like Colorado, Utah, and Louisiana, which already accept cryptocurrency payments for certain government services. For example, Colorado allows taxpayers to pay with crypto through PayPal, with a flat fee of $1 plus 1.83% per transaction.
Under California’s proposed system, digital payments will be converted into U.S. dollars upon receipt to mitigate the state’s exposure to crypto market volatility. The program is designed as a five-year test, with the DFPI required to submit an interim report by January 2028 evaluating its effectiveness, operational costs, risks of fraud or abuse, and public feedback.
The successful implementation of this pilot program could potentially lead to broader acceptance of cryptocurrencies across other state agencies. This move is particularly significant for California’s growing crypto sector, home to major blockchain companies like Ripple, Solana Labs, and Kraken, which often face complex regulatory hurdles.
By facilitating crypto fee payments, the state aims to streamline compliance for these firms and demonstrate its commitment to embracing technological innovation in financial services. Crypto payment processors such as BitPay, Coinbase Commerce, and PayPal are now in contention for a lucrative state contract, with the provider to be selected through a procurement process led by the DFPI.
However, there are concerns raised by consumer advocacy groups and fiscal watchdogs regarding transaction fees, volatility, and the environmental impact of crypto mining. In response, legislators are considering introducing consumer protection amendments, such as fee caps or refund mechanisms, to address these risks.
Assemblymember Valencia is also championing AB 1052, a “Bitcoin Rights” bill that seeks to protect self-custody, node operation, and peer-to-peer transactions in state law. This legislative push positions California as a leader in crypto rights and a counterbalance to federal regulatory uncertainties.
The Senate is expected to review AB 1180 later this summer, and if it passes and is signed by Governor Gavin Newsom, the DFPI will commence developing the crypto payment system in 2026, with plans for statewide implementation by the end of the decade. This experiment has the potential to shape the future of public finance not only in California but across the country, as Assemblymember Valencia emphasized, “California can’t afford to fall behind.”