The State of California has passed legislation that should make it easier for bitcoin startups to do business in the state. AB 786, passed in the house last week, amends the California Money Transmission Act with some key provisions.

The state's original Money Transmission Act (MTA) classified certain companies doing business in California as money transmitters, imposing stringent requirements on them before they could do business in the state. This legislation is enforced by the Department of Business Oversight (DBO), part of which until July 1 was known as the Department of Financial Institutions. It was the DFI that sent the notorious cease and desist letter to the Bitcoin Foundation in June.

The bill, originally introduced in February by Assembly Member Roger Dickinson, introduces some exemptions from the MTA. Specifically, it stops payroll processors from being included under the MTA, and it revises the minimum net worth requirements required for a licensee to do business, down to between $250,000 and $500,000.

Marco Santori, chair of the Bitcoin Foundation’s regulatory affairs committee, welcomed several positive provisions in the bill. “For some bitcoin businesses, this will make licensing a non-issue in California,” he said.

In particular, a business that enables a company to pay its employees’ salaries in bitcoin might fall under the payroll exemption.

“A business that stands between a purchaser and a seller of goods or services, permitting the purchaser to pay in bitcoins and the seller to receive dollars, might fall under the new goods and services exemption,” he added.

Reducing the minimum capital requirements for a bitcoin startup in the payments or remittance markets is another positive move, Santori said. However, the legislation wasn't all rosy.

However, one positive aspect of the new law is that the commissioner must inform any applicant for a license of the minimum net worth required for a license, along with the factors used to arrive at that figure. The bill also requires the commissioner to publish all written decisions, opinion letters, and other formal written guidance related to the MTA on his website.