State of Colorado To Accept Crypto For Tax Payments By Summer 2022

Jared Polis – Governor of Colorado – recently announced plans to accept cryptocurrency for tax payments in his state. Taking a similar approach to Miami Mayor Francis Suarez, Colorado may even launch their own dedicated crypto token.

Crypto Taxes In Colorado

The governor revealed some of his crypto-adoption plans in an interview with CNBC on Tuesday. With a new piece of legislation called the Digital Token Act, his state will exempt crypto transactions from state securities laws. That said, Federal securities laws will still apply, meaning Colorado is still under watch from an increasingly crypto-hawkish SEC.

Regarding taxes, the governor clarified that his state cannot be directly exposed to the highly volatile crypto market. “Our expenses are in dollars – ‘still’, I would add,” he said. “You never know what the future brings.”

Therefore, as part of a crypto-tax payment system, cryptocurrencies would be converted back into dollars by an intermediary when received by the state. That said, from an “outwardly facing portal,” he plans to accept crypto for “all state tax-related purposes.”

Back in 2019, the Canadian city of Innisfil entered a one-year pilot program with Coinberry exchange to provide a similar service. While Bitcoin could be used for taxes on the payer’s end, they’d be converted and stored in dollars by the municipality.

It’s unclear which cryptocurrencies Colorado will accept, but the governor mentioned both Bitcoin and Ethereum as assets that could be “paid, and converted in real-time”.

Colorado’s All-New Crypto?

Polis also made mention of a “digital token bill” introduced by state senator Chris Hansen, which would allow Colorado to create digital currencies for use in state reserves, with a value assigned to them.

“I think there’s a bright future with regard to how the public sector can benefit from the distributed ledger and crypto economy,” Polis told CNBC. “Not co-opted. It defies the very concept of cryptocurrency to have any type of government-issued or backed security.”

Colorado has shown heightened interest in crypto and blockchain technology for years. In October, the city of Denver launched a pilot program with Quiznos to accept Bitcoin payments at select stores. In 2019, the same city even launched a smartphone, blockchain-based voting app for overseas military members seeking to vote in municipal elections, which collected about 8000 ballots.

Featured Image Courtesy of Bloomberg.