California governor Jerry Brown signed a bill Saturday legalizing the use of bitcoin and other digital currencies in the state.
Reversing a state law that prohibited "anything but the lawful money of the United States" in commerce, AB 129 permits the transaction of alternative currencies, which also include coupons and rewards points.
"In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives," Assemblyman Roger Dickinson, the bill's author, said in a statement.
Shortly after Brown signed AB 129 into law, venture capitalist Marc Andreessen took to Twitter to thank the governor and state legislature.
Though controversy has surrounded the cryptocurrency, especially following the shutdown of the bitcoin exchange Mt. Gox, Silicon Valley is coming to embrace alternative digital currencies. Earlier this month, Apple quietly updated its App Store guidelines and approved its first app enabling the transmission of "approved virtual currencies."
Though this law legalizes bitcoin transactions, it doesn't solve a major problem facing the virtual currency: Most people view it as an investment, and thus are holding onto their bitcoins, not spending them.