A bill unanimously passed by the California State Assembly last week moves to end legal confusion and make Bitcoin "lawful money." AB 129's fate now rests with the State Senate.

Uncertainty still plagues Bitcoin's relationship with law enforcement. Individual Bitcoin users generally don't struggle to buy or sell goods in the U.S., but Bitcoin exchanges and services have had to deal with confused, hostile regulators. In May 2013, California's Department of Financial Institutions threatened Bitcoin Foundation with fines and jail time for operating a money transmission service in violation of the state's financial code.

Because of the legal muddle, some Bitcoin services are considering moving overseas.

The California bill is a step toward legal clarity for Bitcoin services. The "Bill Analysis" reads:

This bill makes clarifying changes to current law to ensure that various forms of alternative currency such as digital currency, points, coupons, or other objects of monetary value do not violate the law when those methods are used for the purchase of goods and services or the transmission of payments.

Under the bill, increasingly popular alternative currencies like Litecoin, Peercoin, Namecoin, and even Dogecoin, would be on the same legal footing as Bitcoin.

Banking and Finance Chairman of the Assembly Roger Dickinson first introduced AB 129 in January. CoinDesk reports it "is now roughly halfway through the process to become a law." Once passed through the Senate Policy Committee and the Senate Fiscal Committee it will reach the Senate Floor. If the bill passes the Senate, the final decision rests with the California governor.