Can you pay taxes with cryptocurrency? Where is crypto accepted as payment?


State legislatures for the past few years have been exploring ways to regulate and take advantage of the growing interest in cryptocurrencies. This year, two Western states have garnered national attention for proposals that would allow taxes to be paid in digital currencies.

An invoice before the Arizona Legislature would amend state law to include Bitcoin as legal tender to pay “debts, public charges, taxes and dues.” Y a proposal in Wyoming is not limited to a specific currency, but would only apply to the payment of local sales and use taxes.

“Both proposals face potential legal and political obstacles. But Wyoming has gone further than any other state in passing laws to accommodate cryptocurrency adoption, and supporters of the proposal there believe it will be the first state to take a significant step in the realm of paying taxes,” Politico reported. .

TO National Conference of State Legislatures The summary shows that 33 states considered proposals last year related to digital currency. Y Wyoming has been at the forefront in laying the groundwork to harness the growing popularity and potential of digital currency.

“Over the past four years, Wyoming has crafted profound legislation that has drawn global attention with its innovative concepts,” said Sen. Tara Nethercott, R-Cheyenne, who serves on the Select Committee on Blockchain, Financial Technology, and Innovation Technology. Digital of the state. she said she to Wyoming Business Report.

state republican united states Senator Cynthia Lummisone of the most vocal crypto champions in Congress, plans to introduce a comprehensive bill this year that would cover everything from how digital assets are taxed and classified to consumer protection, Bloomberg recently reported.

Colorado it is also trying to assert its right in the cryptocurrency industry. reported last year that Governor Jared Polis, a Democrat, told a gathering of digital currency supporters that his state “would be delighted to be the first state to allow you to pay your taxes in a variety of cryptocurrencies.”

“Colorado is and will be the hub for blockchain innovation in the United States, attracting investment and good jobs and innovators in infrastructure, digital identity (and) individual data security in the public and private sectors,” he said, without elaborating on How would such an ambitious plan be implemented?

Local leaders from across the country they are also looking for opportunities to raise cash to create jobs and fund public projects, according to The New York Times.

Symbolic stunts?

Cryptocurrencies are decentralized digital currencies that can be used to buy and sell products. Owners often have a digital wallet that allows them to buy or sell coins through digital exchanges. Wallets are often online or stored offline on a hard drive.

While some retailers accept virtual currencies and support state efforts to help innovation grow, no state currently allows taxes to be paid in crypto. Ohio was the first to announce that businesses could use Bitcoin to pay tax bills in 2018. But the service lasted less than a year before it was declared illegal and closed.

And some observers see the efforts in Wyoming and Arizona as little more than token gimmicks to propel volatile digital currencies into mainstream acceptance.

The Arizona bill declaring Bitcoin legal tender has a particularly high hurdle to overcome, as the Constitution restricts the power of states to issue their own money.

“Arizona could certainly pass a law like this and the state government could choose to accept Bitcoin as payment for Arizona taxes, but this would not change the legal treatment of Bitcoin as property from a federal tax perspective,” Preston Byrne, Washington, DC lawyer who specializes in blockchain technology used by digital currencies, said

Wyoming’s narrower-focus proposal would face more of a political battle than a legal one, said Rohan Gray, director of research at the Digital Fiat Currency Institute, a San Francisco-based trade group that represents government agencies and financial institutions.

He told Politico that as the federal government gets ready to more broadly regulate cryptocurrencies, Congress could simply pass a law banning the practice.

There is also concern among global financial regulators about the displacement of a national currency, which could undermine the ability of national governments and central banks to regulate the economy.

partisan divisions

While support for and skepticism of digital currency crosses the political spectrum, partisan lines are showing in Congress, informed. He detailed examples of Republicans in both the House and Senate who have a more favorable approach to innovative digital technology than Democrats and encouraged the Federal Reserve and Treasury Department to “make a decision.” more friendly posture towards Bitcoin so that China does not get ahead in the sector.”

“Among the general population, however, partisan divisions are not as sharp on the issue of cryptocurrencies,” the article noted. “A recent morning query survey found that 9 percent of Democrats Y 9 percent of Republicans believe there are too many cryptocurrency regulations. By contrast, 26 percent of Democrats and 19 percent of Republicans believe there are not enough cryptocurrency regulations, a 7-point gap that the Morning Consult characterizes as fairly narrow when it comes to opinions on financial laws.”

And some observers say it is the support of that broader population that supporters of the Wyoming and Arizona proposals want to capture, as media reports continue to cast a Beware of the cryptocurrency trend.

It can be difficult to gain broad appeal in Arizona, where cryptocurrency legislation is sponsored by Republican state senator Wendy Rogers, who was recently noted by the Anti-Defamation League for his extremist views and racist rhetoric. But the Wyoming proposal is backed by the Merchant Advisory Group, a trade group for retailers that includes giants like Amazon, Walmart and Home Depot. For retailers, part of the appeal would be convenience, said Wyoming Rep. Ocean Andrew, the bill’s sponsor.

was quoted on the website moneyandmarkets.comwhere columnist Shawn Ambrosino hopefully writes that debates over bills like those in Wyoming and Arizona are what the cryptocurrency movement needs to go mainstream.

“Just like we saw with the cannabis market, the moment states start accepting these digital currencies as legal tender,” he predicted, “it starts to catch on like wildfire.”

contributing: Herb Scribner