U.S. states rethinking crypto tax payments amid bear market

US states, with the exception of Colorado and Utah, are reconsidering allowing tax payments to cover market prices. Bloomberg News Reported on July 5th.

Colorado and Utah haven’t been frustrated, but there are logistical issues that need to be resolved before they can start paying cryptocurrencies.

A total of 37 US states, especially Georgia, Arizona, and Florida, are following Colorado and Utah in legalizing tax payments in cryptocurrencies. Lobbyists have also played their part, as they urged lawmakers to discuss cryptocurrency payments.

Samuel Armes, chairman of the Flordia Blockchain Business Association, reportedly said that many states are interested in allowing cryptocurrency tax payments to show that they are crypto-friendly. By allowing these payments, they can also attract a new wave of technology and talent.

Critics raise a voice

Cryptocurrency market capitalization has fallen from $ 3 trillion to $ 900 billion in six months, and crypto skeptics have warned the state about the risks of crypto payments.

Lee Reiners, executive director of Duke University’s Global Financial Markets Center, reported that the big fluctuations seen in the crypto market over the past six months have significantly reduced the attractiveness of crypto. He said:

“I don’t know if that will slow tax payments at the state level, but it doesn’t help, and allowing it has no economic benefit to the state.”

According to Bloomberg, California state accounting inspector Betty Yee noted recent market volatility and said the cryptocurrency payment bill was “financially irresponsible.” She said volatility is inevitable in cryptocurrencies because it is an immature area and government agencies are not mature enough to integrate it.

Professor Omri Marian of the University of California, Irvine, Faculty of Law also criticized the movement, saying:

“”[It] It creates a new compliance burden for taxpayers and creates new administrative and enforcement headaches for tax authorities.

The state has nothing to gain from now on. Looking cool with Crypto Brothers is a pretty pathetic endeavor. As far as the tax system is concerned, it’s just ridiculous. “

So far, none of the 37 states that have made a decisive move to legalize tax payments in cryptocurrencies have continued their efforts.

Utah and Colorado

According to Bloomberg, Utah and Colorado are still outliers and are implementing plans to allow individuals and businesses to pay taxes in cryptocurrencies such as Bitcoin, Ethereum and Dogecoin.

Utah has completed its launch by enacting a new law that requires state and local government units to accept tax payments in cryptocurrencies. The new rules will come into effect on January 1, 2023. Taxes collected in cryptocurrencies are immediately converted to US dollars using a third-party payment gateway before being transferred to the state.

Colorado is also aiming to establish a very similar system. Like Utah, Colorado plans to use payment gateways to quickly exchange cryptocurrency payments for US dollars before sending them to the state. In addition, Colorado is considering incorporating credit cards and other payment methods.

Colorado is in the process of knowing the details, but it has not been canceled due to low market prices. The new legislation will be announced during the next legislative season.