California Assembly Passes Bill Allowing Crypto Payments for Fees

The California State Assembly has unanimously passed AB 1180, a bill that allows state agencies to begin accepting Bitcoin and other digital assets as payment for certain regulatory fees. Authored by Assemblymember Avelino Valencia, the legislation cleared the Assembly floor on June 3 with a decisive 78–0 vote and is now under review by the Senate Rules Committee.

If enacted, the bill would require California’s Department of Financial Protection and Innovation to develop rules allowing businesses regulated under the state’s Digital Financial Assets Law to pay licensing and examination fees using digital assets. The pilot program would launch on July 1, 2026, and run through January 1, 2031.

“AB 1180 puts California at the forefront of digital-asset innovation,” Valencia said in an earlier committee hearing. “It will serve as a blueprint for statewide integration.”

California’s push follows in the footsteps of other states, such as Colorado, Utah, and Louisiana, which already accept crypto payments for certain government services. For example, Colorado enables crypto tax payments via a service, charging users a flat fee plus a percentage per transaction. Similar to that model, California’s system would convert digital payments into U.S. dollars upon receipt, avoiding the state’s direct exposure to crypto market volatility.

The program is designed as a five-year testbed. By January 2028, the Department of Financial Protection and Innovation must submit an interim report evaluating the system’s effectiveness, operational costs, fraud or abuse risks, and public feedback. If successful, the pilot could pave the way for broader crypto acceptance across other state agencies.

The bill’s passage is particularly relevant to the state’s burgeoning crypto sector. California is home to major blockchain companies, many of which must navigate complex and costly regulatory licensing processes. By enabling crypto fee payments, the state may streamline compliance for these firms and signal its openness to technological innovation in financial services.

Crypto payment processors are now potential contenders for a lucrative state contract. The exact provider will be determined through a procurement process led by the Department of Financial Protection and Innovation. However, not everyone is on board. Consumer advocacy groups and fiscal watchdogs have raised concerns about transaction fees, volatility, and the environmental footprint of crypto mining. Legislators have hinted that the Senate might introduce consumer-protection amendments, such as fee caps or refund mechanisms, to address these risks.

The bill is part of a broader legislative push by Valencia, who is also advancing AB 1052, a so-called “Bitcoin Rights” bill that aims to enshrine protections for self-custody, node operation, and peer-to-peer transactions in state law. Backed by a national crypto advocacy group, the measure positions California as a counterweight to federal regulatory ambiguity.

The Senate is expected to take up AB 1180 later this summer. If it passes and is signed by Governor Gavin Newsom, the Department of Financial Protection and Innovation will begin developing the crypto payment system in 2026, with an eye toward statewide deployment by the decade’s end. The experiment may well shape the future of public finance, not only in California but nationwide. As Valencia put it, “California can’t afford to fall behind.”