Colorado lines up crypto tax payments

The governor of Colorado Jared Polis has announced plans to make cryptocurrencies an acceptable form of payment for tax.

Polis told CNBC how crypto tax payments could be available as early as summer of this year.

State and government entities in the US are currently not allowed to hold cryptocurrencies in their cash reserves. This means any tax payments made in cryptocurrency will be immediately sold into fiat.

Polis acknowledged there would be an intermediary which would handle custody over the wallets and the conversion into USD.

This is just the beginning for Colorado and cryptocurrency payments. Once tax payments have been achieved the state government will look into accepting cryptocurrency payments across the board, even for things like driver’s licenses and fines.

Polis estimated they would be accepting cryptocurrency payments for all state government services and fees as early as Q3 2022.

Polis has been a long time crypto supporter. After being elected in 2019, he signed the Colorado Digital Token Act into law.

This bill eased regulations on cryptocurrencies and allowed utility tokens to avoid being deemed as securities. Polis is now working with partners to expand crypto friendly regulations including being able to hold digital currencies in reserves.

Colorado legislators have pointed to the success seen in Wyoming which has made a lot of positive cryptocurrency regulations in recent years.

Congress continues to be torn on which direction to go with digital currencies. Many state governments have taken matters into their own hands and released their own local regulations to provide clarity to crypto holders and institutional investors.

With these changes, Colorado will join Tennessee, Wyoming, New York and Florida in making cryptocurrency regulations that favor the growing industry.

State regulations can always be overwritten by federal laws and regulations. Congress is currently unsure of which direction they want to take with cryptocurrencies and have allowed states to make their own determinations.

A few vocal US representatives in Congress are under the assumption that digital currencies are only used for illegal activities.

This can be seen through recently proposed bills like the America Competes Act include changes that could hinder cryptocurrency growth in the US out of fear of money laundering and terrorism.

Source

Updated: 02/18/2022 — 12:00