Assemblymember Matt Dababneh has decided to withdraw California bitcoin bill AB 1326 from consideration for vote this year.

The announcement from Dababneh follows criticisms of the bill’s new version that was released recently by the California Legislature. Peter Van Valkenburg, Research Director at Coin Center, and Jerry Brito, Executive Director at Coin Center, went on to say that the new version of AB 1326 is bad news for anyone who loves Bitcoin and blockchain technology.

Dababneh issued a statement on the matter and said, “After several vigorous and valuable conversations and meetings with virtual currency experts, consumer organizations and others, I have decided to remove AB 1326 from consideration for a vote this year”.

He added that since the introduction of the bill last year, there has been a collaborative effort to work on a measure that encourages and supports a smart, innovative, and forward-thinking solution that also contains strong consumer protections for Californians who utilize virtual currency. However, Dababneh noted that the current version fails to meet these objectives, saying:

“Unfortunately, the current bill in print does not meet the objectives to create a lasting regulatory framework that protects consumers and allows this industry to thrive in our state. More time is needed and these conversations must continue in order for California to be at the forefront of this effort”.

He emphasized on the need for continuation of the conversation in this regard, noting efforts by government authorities – Federal regulators have issued guidance for virtual currency businesses and the IRS has regulations addressing its tax status.

“Virtual currency businesses have a place at the financial services table, but like other financial services, California needs a set of minimum standards and protections”, Dabaneh said. “I look forward to continuing this discussion with stakeholders in January.”

Electronic Frontier Foundation (EFF) has welcomed Dababneh’s decision and said that it is grateful that the California lawmaker recognized the problems with the legislation and has halted the proceedings.

“EFF recognizes that there are risks for consumers using digital currencies and appreciates lawmakers interested in addressing them.  We think any legislative response, however, should be based on a better understanding of the state of digital currencies and narrowly focused on the situations that pose risks for consumers. Such an approach would preserve space for innovation in the industry while still protecting users”, it said.