US states reconsider payment of crypto tax in the middle of the bear market
US states other than Colorado and Utah are reconsidering allowing tax payments due to bear market prices, Bloomberg News reported on July 5.
While Colorado and Utah did not back down, they have logistical issues to resolve before launching cryptocurrency payments.
A total of 37 US states, especially Georgia, Arizona and Florida, have followed Colorado and Utah to legalize tax payments in crypto. Lobbyists have also done their part, pushing lawmakers to discuss cryptocurrency payments.
The president of the Flordia Blockchain Business Association, Samuel Armes, reportedly stated that many states were interested in allowing crypto tax payments to show that they are crypto-friendly. By allowing these payments, they will also be able to attract a new wave of technology and talent.
Critics say yes
The crypto market value fell from $ 3 trillion to $ 900 billion in six months, and crypto skeptics are warning states about the risk of paying crypto tax.
Lee Reiners, CEO of Duke University’s Global Financial Markets Center, said the massive volatility seen in the crypto market over the past six months significantly reduced the appeal to crypto, Bloomberg reported. He said:
“I do not know if it is slowing the momentum at the state level for the payment of taxes, but it does not help. And there is no economic benefit for the states to allow it.”
California State Comptroller Betty Yee pointed to the recent market volatility, saying a cryptocurrency bill is “tax irresponsible,” according to Bloomberg. She said that volatility is inevitable in crypto because it is an immature field, and not mature enough for government agencies to integrate it.
University of California-Irvine School of Law professor Omri Marian also criticized the movement, saying:
“[It] creates a new compliance burden for taxpayers and a new administrative and enforcement headache for the tax authorities.
The states have absolutely nothing to gain from this. It’s a pretty pathetic attempt to look cool with crypto bros. When it comes to tax policy, it’s just stupid. “
So far, none of the 37 states that have decided to legalize tax payments in crypto have continued their efforts.
Utah and Colorado
Utah and Colorado remain outsiders and implement plans that will allow individuals and businesses to pay taxes on virtual currencies such as Bitcoin, Ethereum and Dogecoin, according to Bloomberg.
Utah even completed the launch by passing a new law that forces state and local governments to accept crypto tax payments. The new rules will take effect from January 1, 2023. Tax payments collected in crypto will be immediately converted to US dollars using a third-party payment gateway before being transferred to the state.
Colorado also aims to establish a very similar system. Like Utah, Colorado plans to use a payment gateway to quickly exchange cryptocurrencies for US dollars before sending them to the state. In addition, Colorado is also thinking about including credit cards and other forms of payment.
While Colorado is in the process of figuring out the details, it is not withdrawing due to bear market prices. The new legislation is expected to come during the next election season.
