Colorado will become first American state to accept cryptocurrencies for tax and fee payments
Colorado will become the first state in the United States to accept cryptocurrencies for state tax and fee payments. Residents of the state will be able to pay their income taxes in Bitcoin and Ethereum starting from as early as June. Governor Jared Polis made the announcement a few days ago. To minimise difficulties with volatility associated with cryptocurrencies, the state will accept payments in the digital assets and then convert them into equivalent dollar amounts in real-time before depositing them into the state's treasury. “It is kind of like credit card payments, with the bonus that there are no returned payments,” tweeted the governor.
In another post on Instagram, Governor Jared Polis stated that for years, the authorities have been creating the infrastructure in Colorado to make the state a centre of cryptocurrency and blockchain innovation. “We see it as a critical part of Colorado's overall innovation ecosystem,” he stated and added that from “this summer” Colorado will accept cryptocurrencies for state tax and fee payments.
“We are getting a payment provider to accept crypto equivalent and deposit the dollars into the state's treasury for that amount,” he said.
This isn't Governor Jared Polis's first foray into the cryptocurrency domain, according to ABC News. During his 2014 race for the United States Congress, he had accepted Bitcoin for campaign donations.
Governor Jared Polis also spelt out his vision for cryptocurrency acceptance in Colorado, from tax payments to a future state token, in an interview for CNBC Crypto World, a few weeks ago.
In 2019, Governor Jared Polis had signed the Colorado Digital Token Act, which exempted cryptocurrencies with a “primarily consumptive purpose” from several securities regulations.
In 2018, Ohio had attempted a similar move by enabling businesses to pay a variety of taxes with cryptocurrency, but, according to Forbes, it was scrapped a year later following claims that it had not been properly reviewed.
Despite regulations, many states in the US are taking an experimental approach towards the cryptocurrency sector. Wyoming has introduced legislation to attract cryptocurrency miners. The state of Texas has offered cryptocurrency miners a 10-year tax exemption, sales tax credits, and state-sponsored worker training to lure more of them. Last year, Miami launched the ‘MiamiCoin', a city-coin. New York City Mayor Eric Adams, too, wants to make the city the centre of the cryptocurrency industry.
Outside the US, El Salvador embarked on a similar path recently. The country's Legislative Assembly passed a law making Bitcoin a legal tender in June 2021, thereby allowing the cryptocurrency to be used for day-to-day transactions.