Gov. Jared Polis of Colorado announced Monday that the U.S. state would begin accepting cryptocurrency for tax payments.
The state will allow individuals and businesses to use cryptocurrency for tax payments. It will use its own ledger of crypto transactions that have been converted to dollars that will be deposited into the state Treasury.
“We’re just showing again, from a customer service perspective, how Colorado is tech-forward in meeting the ever-changing needs of businesses and residents,” Polis stated in an official announcement at the Denver Startup Week.
Speaking with CNBC in Feb. this year, Polis said that the crypto payments would enlist a third party to process transactions. ”We are getting a payment provider to accept crypto equivalent and deposit the dollars into the state’s treasury for that amount. It is kind of like credit card payments, with the bonus that there are no returned payments!” he tweeted.
The state has a long-term view, Polis emphasizes
Polis, who owes his fortune to his years as a tech entrepreneur, has been pushing the state’s crypto agenda since 2019 when the state hired its first blockchain architect, Thaddeus Batt. Later that year, the governor signed into law an Act exempting specific cryptos from needing registration as securities. The bill also provided a limited relaxation of licensing requirements for broker-dealers and salespersons. Polis was also a keynote speaker at ETHDenver 2022, a flagship conference for crypto enthusiasts in Colorado in Feb. 2022.
Long-term, Polis told tech publication Wired, the state intends to roll out cryptocurrency payments for hunting, driver’s, and fishing licenses and to create a blockchain database of cattle brands to help farmers locate missing livestock. While the current system works, Polis sees an opportunity to improve the efficiency of the existing branding database.
At press time, Polis had not clarified which cryptocurrencies would be accepted for payments nor the identity of the intermediary.
Pick your crypto haven
Colorado joins a cohort of western states with politicians champing at the bit for their state to become the next crypto panacea in the U.S.
Wyoming, home to Responsible Financial Innovation Bill co-author Sen. Cynthia Lummis, tabled a bill in Q1 2022, proposing the payment of state and local taxes using bitcoin. Wyoming also became the first state in 2021 to recognize decentralized autonomous organizations (DAOs) as LLCs.
In 2018, bill SB1127 lobbied to allow the Arizona state government to enter into an agreement with a cryptocurrency issuer to receive income taxes in particular cryptocurrencies. In Jan. 2022, Arizona senator Wendy Rogers introduced a bill to recognize bitcoin as legal tender in the state, followed up with amendments to SB1127 and a new bill, SB1128, to exempt residents from paying taxes on their crypto.
Texas so far has proven the go-to state for cryptocurrency miners, with Sen. Ted Cruz, a vocal proponent of using flared natural gas to power crypto mining.
But perhaps no state has grabbed the crypto headlines like Florida with its pro-bitcoin Miami mayor Francis Suarez. Suarez grabbed headlines in late 2021 for announcing that he would take his December paycheck entirely in bitcoin, sticking to his guns even when bitcoin tanked around May this year. Under the 44-year-old mayor’s watch, the city later launched an initiative MiamiCoin (MIA), that allowed citizens to mine a city-based cryptocurrency token and take a portion of the minted proceeds. The remainder went into a Miami reserve wallet for automatic conversion into dollars.
The initiative had yielded $15 million in profits to the city. Suarez said that if yields grew to $450 million, the government could run the city without taxes.
Suarez envisions Miami as a future crypto haven.