Cryptocurrencies

US States to Take Cryptocurrencies as Tax Payments

Regulations For Cryptocurrencies – Not Bans

Banning cryptocurrencies has not completely gone out of fashion. There are still a number of countries that have made crypto dealings illegal. The effects of such bans on the price of cryptocurrencies have, however, reduced greatly. On the other hand, political leaders are beginning to learn what happens when cryptocurrencies are banned. Crypto activities simply go underground and/or move to more welcoming countries. The countries banning them simply lose out on the innovations that are coming out of the industry as well as the opportunity to be the leaders in the space. In view of this, we now see more countries reacting more positively towards virtual currencies.

There has been more green lights than red shown by the most powerful country in the world in 2018. ICOs are getting more attention from regulatory bodies, but the February 2018 testimony of CFTC chairman Giancarlo at the Senate was a good sign. So is the fact that a whole chapter on cryptocurrencies was included in the economic report issued by the US Congress in March. At the ,state level, we see positive moves from three states namely, Arizona, Illinois, Georgia and Wyoming. These states are at various stages of passing laws to allow the acceptance of cryptocurrencies as taxes.

Arizona, Illinois, And Georgia Move To Accept Cryptocurrencies As Tax

In Arizona, the Senate Bill 1091 was recently passed by the House of Representatives in the state. This follows the passing of the bill by the Arizona Senate on 8th February 2018. With this bill, Arizona locals can pay their taxes using cryptocurrencies the Arizona department of revenue chooses to accept.

The state of Arizona is, however, not going to be long-term holders of these cryptocurrencies, should the bill eventually become law. The cryptocurrencies are expected to be cashed out within 24 hours of receipt.

Illinois is also considering the House Bill 5335, which would accept cryptocurrencies as payment for taxes. The Revenue Cryptocurrency Bill is to make changes to the Illinois Civil Administrative Code to add cryptocurrencies to other legal tender accepted for tax payments. Behind this Bill is Representative Michael Zalewski.

Just like the state of Arizona, Illinois does not plan to hold the cryptocurrencies for more than 24 hours. It appears no one in government rues the missed opportunity of holding on to the Bitcoins seized during the famous “Silk road” case. The US government missed out on being a large holder of Bitcoins and some huge gains. The decision could be due to problems that could arise from the responsibility of keeping the cryptocurrencies safe. Either way, just like Tim Draper bought those Silk Road Bitcoins, there should be buyers willing to scoop up the cryptocurrencies the governments of these states would be selling.

Georgia is doing same as Illinois and Arizona. With this bill proposed a couple of months ago, the state wants :

“To amend Code Section 48-2-32 of the Official Code of Georgia Annotated, relating to forms of payment of taxes and license fees, so as to require the state revenue commissioner to accept cryptocurrencies for payment of  taxes  and  license  fees; to require conversion of Cryptocurrency payments into United States dollars; to provide for related matters; to repeal conflicting laws; and for other purposes.”

Once again, the state does not intend to hold on to the cryptocurrencies they would receive.

No Cryptocurrency Property Tax In Wyoming

Wyoming is moving in the opposite direction. The agenda in Wyoming is to exclude cryptocurrencies from state property taxation. The bill making this possible is the Wyoming Senate Bill 111. This is very much in line with the state’s tax-friendly policies.

There are two expected outcomes of this action of the State of Wyoming. The first is that it would attract more blockchain and cryptocurrency businesses and professionals. The other is that other states could be incentivized to follow suit to enjoy the same benefits. States competing for cryptocurrency businesses in the future would only be good for the growth of the industry.

What It All Means

Being able to pay taxes with crypto means holders would not have to cash out anytime they have to pay them. We would, however, find out if holders of crypto would prefer paying taxes in crypto or in fiat currencies. If you continue to believe in cryptocurrencies, chances are that you would want to use fiat currencies for taxes and hold on to your valuable crypto.

These steps taken by the above-mentioned states would be key in ensuring that they are not left behind as the blockchain revolution takes place. This indicates that the states want to be at the forefront of cryptocurrency developments and position themselves to benefit from its many applications.

Seeing countries and even individual states get involved with crypto also means the fears of governments not allowing the blockchain and cryptocurrency industry to thrive would subside and give room for more innovation in the space.