California law removes ban on alternative currencies
- 30 June, 2014 11:40
A new California law removes a ban on using currencies other than the U.S. dollar, which is intended to accommodate the growing use of alternative payment methods such as bitcoin.
The law, signed by state Governor Jerry Brown on Saturday, is likely to boost confidence around bitcoin, as regulators and tax authorities worldwide examine how to handle the popular virtual currency.
It repeals Section 107 of California's Corporations Code, which prohibited companies or individuals from issuing money other than U.S. dollars, according to the bill, introduced by Assembly Member Roger Dickinson.
Dickinson wrote earlier this month in a news release that people using digital currencies, community currencies and reward points were in violation of the law but not penalized. From Amazon's Coins to Starbucks' Stars to bitcoin, "it is impractical to ignore the growing use of cash alternatives," he wrote.
In March, the U.S. Internal Revenue Service said it will treat bitcoin as a form of property for tax purposes, rather than as currency, making it subject to similar rules as stocks and barter transactions.
Those receiving goods and services in bitcoin will have to add the value of the virtual currency at the time it was received into their gross income, the agency said in its guidance.
Earlier this year, the U.K's. tax agency clarified how taxes apply to bitcoins. HM Revenue & Custom said exchanging or mining bitcoins is exempt from value-added tax (VAT) in the UK, but accepting the virtual currency for goods and services is subject to it.
While banks are still generally steering clear of bitcoin, there are signs of confidence in it from private companies.
Apple updated its App Store guidelines earlier this month to allow for applications handling "approved virtual currencies" as long as the apps comply with state and federal laws. The company had previously removed many transactional bitcoin apps from its store.
Send news tips and comments to firstname.lastname@example.org. Follow me on Twitter: @jeremy_kirk