Colorado Will Soon Allow You To Pay Taxes In Crypto

February 26, 2022 8:21 pm

Jared Polis. the governor of Colorado, recently announced on Wednesday about the state’s plan to become the first state to allow it’s citizens to pay taxes in cryptocurrencies.

Colorado is known as one of the states that were early to embrace the use of blockchain technology and to incorporate it for government use cases.

In this particular announcement, digital crypto payments will be taken by the state and will deposit the USD equivalent directly into the state government’s treasury.

Polis has stated that Colorado has been working on building the foundation to take advantage of the benefits that crypto offers and aims to have the state become an innovation hub for the new industry.

ABCnews reports:

“In Colorado, we’ve been laying the groundwork to be a center of crypto and blockchain innovation for a number of years,” Polis said in a statement. “We see it as a critical part of Colorado’s overall innovation ecosystem.”

The announcement comes as legislators in other states, including Arizona and California, are proposing laws which, if ratified, would deem cryptocurrency an accepted form of payment statewide, not just for tax purposes.

Governor Polis has long been a vanguard in the intersecting world of cryptocurrency and politics. In 2014, he accepted Bitcoin for campaign donations during his run for the U.S. Congress following a Federal Exchange Commission ruling that went in his favor.

Although Colorado will be the first state to officially welcome cryptocurrency payments for taxes, Ohio implemented a similar program for a test run in 2018, which was ultimately deemed unsuccessful and abandoned in 2019.

Such moves have also been observed outside the United States such as El Salvador being the first country to declare Bitcoin as legal tender.

The move was met with criticism mainly from outside government agencies, but so far the country has been able to report a double figure GDP increase which was the highest in the country’s history.

In regards to the timeline, Polis has mentioned that he expects the state of Colorado to be able to process crypto payments sometime in the summer.

With that being said, the governor has also said that the state itself is still using dollars when it comes to spending and managing its budget.

Fox21news reports:

When the system is in place, people with crypto will pay a third-party provider that will take the digital coin payments and deposit the equivalent value in dollars into the state’s treasury.

“The more prevalence it becomes, the more accepted it is, and I believe at some point it will just become another form of payment,” Hulme added.

“It’s cheaper and faster money transfers, you have your wallet and instantaneously the transaction goes towards whoever you are making the payment to whether it’s next door or around the world.”

Ohio tested a similar program in 2018 but it failed and Hulme believes it was due to cryptocurrency not being well-known at the time. He said if there aren’t enough people participating then cryptocurrency fails as a currency.

“I believe that Colorado has a better shot at it,” Hulme said. “It’s not based on a tangible asset like gold or silver, and it’s only worth as much someone is willing to pay for it and what someone is going to accept for it in payment.”

With Colorado willing to make this move, it may be only a matter of time before other states start embracing crypto as well.

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