Arizona is all set to become the very first state to accept cryptocurrency for tax payments.
The state’s Senate recently passed a bill that would permit the payment of state income taxes via cryptocurrencies to be “recognized” by the state’s revenue authorities.
The law has taken a step closer to be considered by Arizona’s House of Representatives.
The bill stipulates that the state’s Department of Revenue, upon receiving payments in crypto for “tax and any interest and penalties”, would be mandated to convert the cryptocurrency payments to United States dollars within 24 hours.
The innovative bill speaks to a much larger debate about the fundamental value of digital currencies such as bitcoin, the world’s largest cryptocurrency by market capitalization.
Skeptics such as well-known investor, Warren Buffett and JPMorgan Chase & Co. Chief Executive Officer, Jamie Dimon, have consistently harped on the speculative nature of the cryptocurrency market, hesitant that price fluctuations have anything to do with the assets’ worth as a currency or a store of value.
By establishing a link between digital currency and government revenue structures, cryptocurrencies such as bitcoin could see their efficacy and value rise by leaps and bounds.
“The ease of use, being able to do it in the middle of the night, being able to do it at home while you’re watching TV. I think in a few years this isn’t even going to be a question,” Arizona state Rep. Jeff Weninger was quoted as saying in a report on Investopedia.
Weninger says that the main goal is to encourage innovation in the state. The law should send “a signal to everyone in the United States and possibly through the world that Arizona is going to be the place to be for blockchain and digital currency technology in the future,” Wenninger remarked.
Governments have met cryptocurrency regulation with differing approaches in the recent months, in which even cities which have had reputations as tech hubs have passed restrictive measures. New York’s controversial BitLicense law has been dissected for preventing blockchain innovation in the state and pushing out startups.
The bill includes a provision that necessitates cryptocurrency payments be converted to U.S. dollars within 24 hours of their payment, thus resolving concerns over long transaction times, especially for digital currencies such as bitcoin.
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