CRYPTO CRASH HALTS PLANS BY STATEHOUSES TO ACCEPT BITCOIN TAX PAYMENTS
While initiatives in two US states are moving forward to allow tax payments in
cryptocurrencies, the notion has been largely abandoned elsewhere in the
wake of the crisis that has destroyed hundreds of billions of dollars’ worth
of digital assets.
The installation of programs allowing people and businesses to pay their tax
bills with digital currencies like Bitcoin, Ethereum, and Dogecoin is anticipated to
happen over the next few months in the revenue departments of Colorado and Utah.
However, the two Western states appear to be anomalies and still have some administrative
challenges to overcome before their programs can start.
The global cryptocurrency market’s worth has fallen below $1 trillion from a
peak of $3 trillion last November as a result of the sector’s selloff.
Since November 9, the price of Bitcoin alone has fallen by more than 70%.
While a dozen states have thought about following Colorado and Utah’s example,
a chorus of academics, financial watchdogs, and cryptocurrency doubters is
now cautioning politicians against measures that could endanger state treasuries and
taxpayers.
The extreme volatility we’ve witnessed over the past month—and, to be honest,
the past six months—has made anything involving cryptocurrencies less alluring,
according to Lee Reiners, executive director of Duke University’s Global Financial Markets Center.
“I’m not sure if that slows down state-level momentum toward tax payment, but it doesn’t
help. Additionally, the states receive no financial gain from allowing it.
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A crypto-payment bill (S.B. 1275) that is currently before the California Legislature
was dubbed “fiscally irresponsible” by Betty Yee, the state controller of California,
citing the volatility of cryptocurrency prices and the absence of a solid federal
regulatory framework for digital assets.
According to her, Bitcoin is still too new for government authorities to get involved in.
Cryptocurrency tax payments have never had a strong justification.
According to Reiners, digital currencies are still mostly unknown to most consumers
and are therefore very volatile. It’s uncertain if Bitcoin or Ether will ever be
considered to be acceptable forms of payment,
whether for ordering pizza or paying real estate taxes.
Reiners argued that states shouldn’t accept Bitcoin or Ether because they don’t
accept stock shares, futures contracts, or foreign currencies for the payment of taxes.
In spite of this, throngs of cryptocurrency investors and lobbyists have flocked
to state capitals. As a result of their initiatives, politicians have debated and,
in many cases, passed legislation to include cryptocurrencies in state commercial
regulations and increase investment in blockchain startups.
Advocates are urging authorities to allow the payment of taxes and services in
cryptocurrency in the hopes that such initiatives will raise the profile of
cryptocurrency as a form of payment.
According to Samuel Armes, head of the Florida Blockchain Business Association,
“many states want to demonstrate they’re sympathetic to the industry.”
They are interested in both business and innovation.
They will therefore promote policies to entice this new talent and technological surge.
According to Heather Morton, a policy analyst at the National Conference of State
Legislatures, 37 states debated legislation that would have affected some aspect of
cryptocurrencies during the 2022 legislative session.
She claimed that among those states, Arizona, California, Hawaii, Illinois, Louisiana,
New York, and Oklahoma all took into consideration legislation that would allow the
government to accept cryptocurrency.
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