LOS ANGELES — Since California adopted its first constitution in 1849, it has been illegal in the state to use anything but currency issued by the federal government.

That maybe about to change. Bowing to the Digital Age, the Legislature is headed toward approving a bill that would make California the first state in the nation to allow the circulation of virtual currencies such as Bitcoin, Peercoin and Primecoin.

Assembly Bill 129 passed the State Assembly in a 75-0 vote in January and is now close to a floor vote in the Senate.

The bill repeals California’s “outdated prohibition on the issuance and use of ‘anything but the lawful money of the United States,’” its author, Assemblyman Roger Dickinson, told the Office of Senate Floor Analyses.

The Bitcoin community sees the bill as a major breakthrough in its efforts to legitimize the virtual currency. Bitcoin’s legal status has been uncertain amid concerns that it could facilitate money laundering and sales of drugs and other illegal goods.

“Seemingly, legislators are starting to realize that cryptocurrencies are here to stay,” Allen Scott wrote in an article for CoinTelegraph. He also suggested that the bill could “give the green light” for Bitcoin in Silicon Valley, where internet giants such as Apple, Google, Facebook, eBay and PayPal “may have been wary of embracing Bitcoin” due to California’s money transmitter regulations.

The probable legalization of virtual currencies in California represents something of a turnaround. In May 2013, the state’s financial regulator issued a cease-and-desist order against the Bitcoin Foundation, saying it may be a money transmission business and threatening it with fines and jail time.

Under California law, businesses receiving money for transmission within or outside the U.S. must obtain a money transmitter license at a cost of $5,000 to apply and an annual fee of $2,500.

In April, California’s Department of Business Oversight warned consumers that virtual currency transactions are high-risk because of their vulnerability to cyber-attacks and observed that since virtual currency exchanges are unregulated, consumers have little recourse to recover lost funds.

AB 129 doesn’t address the money transmission issue, but Scott said it would remove uncertainty over whether virtual currencies are legal and “potentially help create a regulatory framework” that would allow businesses to apply for so-called “BitLicenses.”

“We think California and New York will set the tone for everything else,” Fred Ehrsam, chief executive of Coinbase, a company that helps users make Bitcoin transactions, told Bloomberg. “When that tone is established, we’re ready to hand in licensing applications immediately.”

New York’s superintendent of financial services held public hearings in January to consider whether the state should establish “BitLicenses.”