California Sets Stage for Crypto Payments in Government Licensing

California is preparing to experiment with cryptocurrency in its government operations.

A new proposal, AB 1180, recently passed the State Assembly with overwhelming support, laying the groundwork for allowing digital asset payments for regulatory fees.

Crafted by Assemblymember Avelino Valencia, the bill envisions a five-year pilot program starting in 2026. If enacted, it would enable state-licensed crypto businesses to pay fees in Bitcoin and other digital currencies. The state’s financial regulator, the Department of Financial Protection and Innovation (DFPI), would manage the rollout and ensure all payments are instantly converted to U.S. dollars to avoid market risk.

The initiative places California alongside early adopters like Colorado and Utah, where limited crypto payments are already in use for public services. Colorado, for example, accepts crypto tax payments through PayPal, which adds a small fee and handles the conversions.

California’s plan would similarly rely on third-party processors to mitigate volatility. Firms like Coinbase Commerce, PayPal, and BitPay are expected to compete for the state contract once the procurement process begins.

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For the state’s vibrant blockchain sector—which includes companies like Ripple, Kraken, and Solana Labs—the bill could streamline regulatory compliance and signal a friendlier stance toward crypto innovation.

The program would undergo a mid-term review in 2028, evaluating its efficiency, costs, and risks. Lawmakers are already considering consumer protection measures, such as capping transaction fees or adding refund policies.

Meanwhile, Valencia is also advancing AB 1052, a separate bill to protect rights related to self-custody and peer-to-peer crypto use, with backing from national advocates like the Satoshi Action Fund.

If approved by the Senate and signed into law, AB 1180 could make California one of the first states to embed crypto into government finance infrastructure—potentially setting the tone for broader national adoption.