Main Points:
- Assembly Bill 1052 (AB 1052), originally introduced as the Money Transmission Act on February 20, 2025, was amended on March 28, 2025, by Assemblymember Avelino Valencia and retitled “Digital Assets” to include explicit Bitcoin self‑custody protections.
- The bill guarantees nearly 40 million Californians the right to hold and manage their Bitcoin and other digital assets without fear of government-imposed restrictions or taxes on payment usage.
- It recognizes digital assets as valid legal consideration in private transactions for goods and services, prohibiting public entities from taxing or limiting assets solely because they are used as payment.
- A framework for handling unclaimed digital assets is established, allowing escheatment after three years of owner inactivity, with state‑appointed custodians ensuring secure management.
- AB 1052 amends the Political Reform Act of 1974 to bar public officials from issuing, sponsoring, or promoting digital assets, eliminating conflicts of interest between crypto activities and public duties.
- Backed by the nonprofit Satoshi Action Fund, the bill is seen as a potential national template, with endorsements from industry advocates emphasizing California’s role as a policy leader.
Introduction
On March 29, 2025, the Satoshi Action Fund—an advocacy group dedicated to advancing Bitcoin and digital asset legislation—announced via social media that Assemblymember Avelino Valencia, chair of the California State Assembly’s Banking and Finance Committee, had formally introduced Assembly Bill 1052 (AB 1052), colloquially dubbed the “Bitcoin Rights” bill. This legislation, originally filed on February 20, 2025, as the Money Transmission Act, was amended to enshrine legal protections for digital asset self‑custody, reflecting growing concerns among crypto users about governmental overreach and the security of personal keys.
Background: From Money Transmission to Digital Assets
AB 1052 began its legislative journey under the aegis of the Money Transmission Act, targeting regulation of entities that facilitate electronic money transfers. However, after initial introduction, growing engagement from digital asset communities prompted a shift in focus. On March 28, 2025, Assemblymember Valencia rebranded the bill “Digital Assets,” replacing traditional banking language with provisions tailored to cryptocurrency holders. The amendment aligns with California’s historical role in shaping financial policy, positioning the state to address novel challenges posed by decentralized technologies.
Self‑Custody Rights: Empowering the Individual
At its core, AB 1052 guarantees that individuals and businesses in California may self-custody their digital assets—most notably Bitcoin—without interference from state or local agencies. Under the proposed law, hardware wallets, self-hosted nodes, and other non‑custodial solutions receive explicit legal recognition. By removing ambiguities in current regulations, the bill ensures that Californians can control private keys and transact peer‑to‑peer without mandatory use of licensed custodians, addressing a key vulnerability highlighted in recent custodial exchange failures.
Recognizing Digital Assets as Legal Payment
AB 1052 further elevates digital assets to the status of valid legal consideration in private transactions. The text states that the use of a “digital financial asset” to purchase goods or services is a lawful form of payment. Crucially, the bill prohibits any public entity—from state departments to local municipalities—from imposing taxes, fees, or other charges solely because a digital asset was used as payment. This measure aims to prevent discriminatory taxation practices that could stifle blockchain innovation and discourage merchant adoption.
Framework for Unclaimed Digital Assets
To address “lost” or escheated crypto holdings, AB 1052 establishes a clear process under California’s Unclaimed Property Law. If an owner fails to exercise control over a digital asset account for three years following a returned communication or last ownership activity, the asset is deemed unclaimed and escheats to the state. The bill mandates that the Controller appoint a licensed custodian by January 1, 2027, to safeguard these assets, ensuring that property is neither seized arbitrarily nor left in bureaucratic limbo.
Amending the Political Reform Act: Separating Crypto from Politics
Recognizing the potential conflict of interest when public officials engage with digital assets, AB 1052 amends the Political Reform Act of 1974. Under the amendment, no public official may issue, sponsor, or promote any digital asset, security, or commodity. This clause prohibits officials from leveraging campaign contributions or policy influence for crypto ventures, bolstering transparency and maintaining public trust in government decision‑making processes.
Legislative Process and Current Status
As of mid‑April 2025, AB 1052 is in the “desk process,” awaiting its first reading in the Assembly. Following referral to the Banking and Finance Committee—chaired by Valencia—the bill will undergo public hearings, stakeholder testimonies, and potential further amendments. If approved by the committee, it will proceed to the Assembly floor for debate and vote, followed by the Senate and, if successful, the governor’s signature. Proponents anticipate floor action in late spring or early summer 2025, with statewide implementation targeted for early 2026.
Industry and Advocate Reactions
Industry groups and advocacy organizations have lauded AB 1052 as a landmark advancement for digital freedom. Dennis Porter, CEO of the Satoshi Action Fund, emphasized, “California often sets the national blueprint for policy, and if Bitcoin Rights passes here, it can pass anywhere”. Major crypto firms with California operations—including Ripple Labs, Solana Labs, and Kraken—have signaled informal support, viewing the bill as a stabilizing force for self‑custody solutions in the wake of high‑profile exchange hacks.
The Broader Crypto Landscape in California
California’s crypto ecosystem is among the most vibrant globally, with over 99 merchants currently accepting Bitcoin payments and a robust network of blockchain startups. In parallel to AB 1052, lawmakers introduced a separate stablecoin regulation bill on February 2, 2025, aimed at clarifying collateral, redemption, and security audit requirements for dollar‑pegged tokens. Together, these legislative efforts reflect a dual strategy: fostering innovation while safeguarding consumer interests in the rapidly evolving digital finance sector.
Practical Implications for Users and Businesses
For individual Californians, passage of AB 1052 would mean unequivocal legal protection for self‑custody strategies—allowing hardware wallet users to operate without fear of penalty. Businesses accepting digital assets can integrate crypto payments into their checkout systems, confident that municipal or state regulations cannot impose transaction‑based surcharges. Developers of decentralized applications (dApps) gain clarity on user data requirements, as the bill limits government demands on private key access and metadata collection.
A Model for Other Jurisdictions
Supporters argue that California’s leadership on AB 1052 could catalyze nationwide legislative momentum. Should the bill become law, other states may replicate its provisions, creating a patchwork of self‑custody guarantees and digital asset frameworks. Beyond U.S. borders, jurisdictions in Europe and Latin America are monitoring California’s approach to inform their own regulatory roadmaps, potentially accelerating global adoption of crypto‑friendly legal standards.
Assembly Bill 1052 represents a pivotal moment in the intersection of cryptocurrency and public policy. By securing self‑custody rights, legalizing digital asset payments, and establishing a transparent process for unclaimed property, California is charting a progressive path for digital finance. The amendment to the Political Reform Act further safeguards the integrity of public office against crypto-related conflicts of interest. As AB 1052 advances through the legislature, its proponents view it not only as a victory for nearly 40 million Californians but also as a potential blueprint for digital asset governance across the nation and beyond. The coming months will determine whether California cements its reputation as a policy leader in the blockchain era—and whether “Bitcoin Rights” becomes a reality for millions.
