California’s AB-1326 bill, which attempted to regulate virtual currency businesses, is no longer active, thanks to a state senator.

The controversial bill, penned by Assemblyman Matt Dababneh, was ordered to become an inactive file at the request of Senator Mitchell on 9th September.

According to definitions by the Californian government, the bill is now “dormant or dead” but can potentially be re-activated by its author at a later date.

Colin Gallagher, chair of the Bitcoin Foundation Education Committee, commented on the bill’s status:

“While we should remain vigilant (the California legislature reconvenes on Jan. 4, 2016, and could attempt to take up the bill again), this is a victory we should celebrate. California should not be allowed to fall prey to the same blunders that have cast New York in a financial stone age, and we deserve the freedom to be innovators (without state sanction) both in the making of new decentralised systems as well as in our daily actions and explorations of new systems.”

He continued: “Had this bill passed the Legislature and been signed by the Governor, it would have criminalised startups and any users who donate virtual currency, as well as making oppressive permitting requirements standard in California for literally every use case not expressly exempted by the law.”

A controversial bill

Similar to New York’s BitLicense, which famously divided the bitcoin scene, Dababneh’s bill has also proved somewhat controversial.

The bill was opposed by the Electronic Frontier Foundation (EFF), which claimed it threatened the future of digital currency experimentation and innovation in California.

EFF’s criticism drew a response from Dababneh, who at the time said the EFF had “little expertise in the area of financial regulation”.

Dababneh’s bill, however, also drew support from industry bodies such as Coin Center.

In a letter to Senator Marty Block, Jerry Brito, executive director, argued the bill would “create a smart licensing regime for virtual currency businesses”.

California capitol image via Shutterstock.

For more information on bitcoin regulation, check out our bitcoin regulation report.