By Alicia Maher
Colorado governor, Jared Polis, has revealed that the state authorities are in discussions with a payment provider on how they can start accepting cryptos for taxes. But he stated that the cryptos would be converted to fiat and deposited into the state’s treasury.
Starting With Tax Payments
Polis further stated that “it is similar to receiving credit card payments but has the benefit of no return payments.” While some confuse cryptos with virtual money used in the virtual world like online games, they are entirely different.
Cryptos can be used to perform payment settlement on any platform, including online games, but virtual money on virtual games cannot be used outside that virtual gaming world. Polis stated in his official statement regarding the development, “we are already laying the framework for a crypto and blockchain hub in Colorado. That plan has been under execution for more than two years now.” “We consider this hub a crucial part of the innovation taking place in our state,” Polis concluded.
Other States Are Discussing Similar Moves
Lawmakers in Wyoming, Arizona and a few other states propose taking similar steps as Colorado. However, many of them want to solely focus on accepting cryptos for taxes before utilizing cryptos for other purposes.
Arizona proposes adopting BTC as a legal tender, while Wyoming plans to allow residents to pay their taxes with cryptos and settle their bills with cryptos. However, these crypto policy proposals are yet to be approved by either state, as several legal challenges need to be considered.
There Is A Holdback
The federal constitution doesn’t permit any state to issue a “state-owned” currency or adopt cryptocurrency or other currency as a legal tender. Also, the federal government considers cryptos as property. That is, crypto holders will need to pay taxes on profits earned through crypto before they can use cryptos to settle their other tax obligations.
A recent CNBC survey revealed that up to 20 US states are proposing or discussing various crypto regulations. Polis further remarked that cryptos are converted straight to fiat for two crucial reasons. First, it eliminates any loss in value of the cryptos due to the highly volatile nature of the crypto market. Secondly, the USD is the acceptable base currency for all expenses and budgets.
He also said that “we expect that the payment portal and every other necessary system will be in place by this summer to enable us to accept crypto payments for tax purposes.” Once the tax payments with cryptos are sorted out, the next phase is to accept crypto payments for drivers’ licenses and other licenses.
Polis further remarked that the state plans to deploy blockchain technology in various ways, especially during elections. He cited the example of Denver, which used blockchain technology during their 2020 municipal elections, where 8,500 voters performed their civic responsibilities from overseas. He also said that blockchain technology is already deployed in Agritech, agricultural industries, and several cooperatives.