Colorado will accept tax payments in cryptocurrency. For some experts, it’s only a matter of time before other US states follow suit.
Colorado Governor Jared Polis announced in February that the state government plans to allow residents to pay taxes in cryptocurrencies as early as the summer of 2022. For some experts, this move is both legal for the crypto asset class and expectedly timely.
Polis said in an interview that cryptocurrency holders in Colorado may be able to send tax payments in digital currency, with the state converting the funds back into fiat after receiving payments through an unnamed intermediary.
Polis added that the state could start accepting crypto payments for “things as simple as driver’s licenses or hunting licenses” within a few months of this summer’s launch. The governor said he was “not at all worried” at the time about the potential volatility of cryptocurrencies such as bitcoin (BTC) as the state does not plan to hold the coins for long.
Shortly after taking office in 2019, Polis signed the enacted Colorado Digital Token Law, which aims to exempt tokens with a “primary consumer purpose” from certain securities regulations. The Governor also said that State Senator Chris Hansen is working on a bill that would “allow the use of state-created digital tokens for public reserve purposes.”
Speaking to Cointelegraph, Senator Hansen said the bill “introduces additional security, saves costs, diversifies the investor pool, and could lower the interest rates paid by the government.” Hansen said:
“We must ensure that every Colorado has a fair share of the investment in our state and benefits from it. As we move beyond institutional investors and commercial banks, we are inviting millions of Colorados to help fund new equity investments.”
The senator said he looks forward to seeing how the state will help “help communities recover from the pandemic, improve their quality of life and address the injustices that prevent people from living their daily lives in our economy.” fully blossom.”
Money as a representation of debt
According to anthropologists such as the late David Graeber, money was originally invented as a physical representation of debt. Governments have used the money to standardize tax payments and make it easier for their workers, Graeber said.
Speaking to Cointelegraph, Brian Pasfield, CTO of Fringe Finance — a decentralized lending platform — cited Graeber’s work to suggest moves like Colorado legitimize cryptocurrencies. Pasfield said:
“The fact that governments are accepting cryptocurrencies as a viable means of paying taxes speaks of a change in our view of these currencies.”
Passfield added that the use of cryptocurrencies for tax payments “will inevitably result in governments having to manage these currencies and hold them in their treasuries,” which could help reduce the volatility that cryptoassets are known for.
He added that if a major federal government like the US government ends the regulation of cryptocurrencies, it would be a logical step for them to “adopt [cryptocurrencies] as a legitimate form of one of the oldest social technologies: money. ”
Russell Starr, CEO of DeFi Technologies, a tech company that offers products for investing in decentralized finance, told Cointelegraph that he thinks government treasuries should be denominated in the currency they use to pay for services, meaning that if they hire employees, they want to pay in dollars, his crypto income must be converted into dollars.
However, Starr said that every company should “have a diversified investment portfolio” that “should definitely include cryptocurrencies and other decentralized finance products.”
According to the CEO, “The upside potential of the cryptocurrency will make it an attractive asset in any carefully balanced portfolio, especially a Mile High State portfolio.” This upside could also mean that governments are a long way from accepting cryptocurrencies for tax payments.
Absorption of power is “just a matter of time”
In February, California Senator Sydney Kamlager introduced a bill that would change the state code to accept cryptocurrencies for certain citizen payments.
The bill proposed the state