Colorado Governor Jared Polis announced in February that the state government plans to allow residents to pay taxes on cryptocurrency as early as the summer of 2022. It is timely.
Police said in an interview that Colorado holders of cryptocurrencies may be able to send tax payments in digital currency, where the state transfers the money back to the fiat when the payments are received through an unnamed intermediary.
Polis added that after the launch this summer, the country will be able to accept payments in cryptocurrency for simple things such as driver’s licenses or fishing licenses for a few months. The governor said he was “not at all intimidated” at the time of the potential volatility of cryptocurrencies such as Bitcoin (BTC), given that the state had no plans to hold the coins for long.
Shortly after joining in 2019, Polis signed the Colorado Digital Token Act, which aims to exempt tokens for “essential consumer purposes” from certain securities regulations. The governor also said that state senator Chris Hansen is working on a bill that will “allow the use of state digital tokens for public reserve purposes.”
Senator Hansen told the Cointelegraph that the bill “offers extra security, saves costs, diversifies the investor pool and provides an opportunity to lower government interest rates.” Hansen said:
“We must ensure that all Colorados can participate equally and benefit from investment in our state. In addition to institutional investors and commercial banks, we invite millions of Colorados to participate in the financing of new capital.”
The senator said he was looking forward to seeing how the state would help “societies recover from the pandemic, improve their quality of life and address the inequalities that prevent ordinary people from fully thriving through our economy.”
Money as a representation of debt
According to anthropologists who deceased David Graeber, money was originally seen as a physical representation of debt. Greber noted that governments used the money to standardize tribute payments and make it easier to support their workers.
Brian Passfield, chief technology officer at Fringe Finance – a decentralized lending platform – spoke to Cointelegraph, citing Graeber’s work suggesting that crypto is being legitimized by features such as Colorado. Passfield sa:
“Seeing how governments recognize cryptocurrencies as a viable means of paying taxes says a lot about the change in our attitude towards these currencies.”
Passfield added that using cryptocurrencies to pay taxes “will inevitably lead governments to administer these currencies and keep them in their government securities,” which could help reduce the volatility of the cryptocurrencies they are known for.
He added that if a large federal government like the one in the United States were to end the regulation of cryptocurrency, it would be a logical step for him to “adopt [cryptocurrencies] as a legitimate form of one of the oldest social technologies: money.”
Russell Starr, CEO of DeFi Technologies, a technology company that delivers products for investment in decentralized finance, told Cointelegraph that he believes the Treasury should be denominated in the currency it uses to pay for services, which means that if it is to pay employees in dollars, the income must be transferred. From cryptocurrencies to dollars.
Starr said, however, that any institution that should “have a diversified investment asset” should “completely include cryptocurrencies and other decentralized financial products.”
According to the CEO, “the positive potential of cryptocurrency will make it an attractive resource in any carefully balanced portfolio, especially the Mile High State portfolio.” This upside may also mean that governments will not accept cryptocurrencies for tax payments for long.
State adoption “just a matter of time”
In February, California Senator Sydney Kamlager introduced a bill that would change the state’s token to accept cryptocurrencies for certain civil payments.
The bill proposed allowing the state body to “accept cryptocurrency as a means of payment for the provision of public services.” Back in 2018, Ohio became the first U.S. state to accept bitcoin as a tax, but it left the cryptocurrency program in 2019, citing legal issues.