Colorado residents will be able to pay their state taxes in cryptocurrency by the middle of this year, according to the state’s governor.
The governor also said that the objective is to eventually accept cryptocurrency for all payments made in the state.
Colorado Moves To Adopt Crypto
In an interview with CNBC on Tuesday, Gov. Jared Polis set out the timeline for the change, which has been a long-term goal for the state. He said on “Crypto World”:
“We expect by this summer to accept crypto for all of our state tax-related purposes.”
“And then we plan to roll that out across all state government for things — could be as simple as a driver’s license or hunting license,” he added.
As crypto use continues to rise across the United States, Colorado is one of about 20 states considering some form of crypto legislation. According to Pew Research, about 16% of Americans have invested in digital assets.
Polis has been a long-time supporter of crypto assets, accepting bitcoin donations for his political campaign, and spearheading a push to make Colorado the US’s blockchain innovation hub. In May of last year, he initially revealed the state’s plan to accept cryptocurrency as payment for taxes at Consensus 2021 .
Related article | Why The IRS Sees “Mountains Of Fraud” In Crypto And NFTs
Polis was eager to point out on CNBC that Colorado’s asset holdings are limited, though he didn’t rule out the prospect of that altering. He said:
“It’s important that people know from a state perspective, we cannot be in the business of having exposure to a market where securities, including cryptocurrencies, fluctuate. In our case, we wouldn’t hold it as bitcoin, as ethereum.”
Polis Approach Runs Counter To The Fed
The governor of the Western United States has also indicated that his desire to accept cryptocurrency will not expose the state to the cryptocurrency market. This is because the government will convert all crypto payments to dollars without retaining them for long periods of time.
BTC/USD 24-hour chart. Source: TradingView
“There will be an intermediary that would convert them, for our purposes, back to dollars,” Polis stated. Polis gave a similar clarification last month when speaking at a National Governors Association meeting.
Polis was one of the first politicians in the United States to take bitcoin campaign donations when he was elected to Congress in Colorado in 2014.
Colorado would not be the first state to accept taxes in the form of digital assets, but experimental programs in Ohio and Seminole County, Florida were both unsuccessful and eventually abandoned.
Related Reading | U.S. Introduced Crypto Tax Fairness Act to Adopt Crypto As Payment Method
Colorado’s approach runs counter to the US federal government’s present understanding of bitcoin as property, which implies that anyone who wants to pay taxes with cryptocurrency must first pay tax on their holdings.
Meanwhile, the federal government of the United States remains wary about cryptocurrencies. Under the Biden administration, federal financial regulators have continued to warn about the dangers of digital assets to the economy. The SEC, whose chair Gary Gensler has continued to refer to the crypto industry as the “Wild West,” is one such regulator.
Featured image from Shutterstock, charts from Tradingview.com
