Sending a Signal
Several bills that recognize bitcoin and other cryptos as currencies have been making their way in the Arizona State Legislature. Two of them, SB1091 and SB1145, will regulate income tax payments with cryptocurrency. One of them has already passed the Senate Finance Committee in mid-January. Another bill (HB2601) is expected to regulate crowdfunding and initial coin offerings (ICOs). Its first reading in the House of Representatives is scheduled for June 2, and a second reading will take place a month later.
“We are sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for blockchain and digital currency technology in the future,” Representative Jeff Weninger (R) told Fox News. He believes that in the next 5 to 10 years crypto technology will change the world the way the internet did.
The income tax legislation he co-sponsored passed the Finance Committee with a 4-3 vote in mid-January. Weninger insists that the new law will make it easier for people to pay their taxes, without opening their “normal wallets”. “Being able to do it in the middle of the night, being able to do it at home, while watching TV… I think in a few years this isn’t even going to be a question”, he said.
Pros and Cons
According to a study by the University of Cambridge, the number of unique active users of cryptocurrency wallets may be up to 5.8 million. Phoenix businessman Jack Biltis, who is one of them, believes this is the way of the future. He told Fox:
We actually allow employees to receive their paycheck through bitcoin and even invest part of their 401k in bitcoin.
Biltis, who has a payroll company, is convinced that the new crypto technology will replace “what we have now with the inefficient credit cards and banking systems”. Cheap and instantaneous money transfers are possible with cryptocurrency, he noted. Jack Biltis wants Arizona to be a state that encourages these technologies.
Others are not so sure about the idea to pay taxes with crypto. Arizona State Senate Minority Leader Steve Farley (D) thinks that all taxpayers will be put at risk because of the volatile nature of bitcoin. He warns that if the new legislation is passed the state will be responsible for exchanging the cryptos. Farley claims that “certain special interests get advantage” with such amendments to the tax code and “the rest of us… get screwed”. In his opinion, taxpayers should pay only in fiat currency:
American dollars are good enough for me. They should be good enough for anybody else who pays taxes.
“It’s always a little scary and thrilling at the beginning. It was with the Internet”, business owner Jack Biltis says, however. “The world is going to look so different in 20 years”, he adds, “and the people that are going to be truly successful are those that embrace it now”.
Primus Inter Pares
Most U.S. states have yet to adopt comprehensive legislation to regulate cryptocurrencies but several have taken positive steps. These include Kansas and Tennessee, where authorities have issued memorandums indicating that money transmitter licenses will not be required to sell digital coins. According to Bitcoin Market Journal, the situation is similar in Texas, where bitcoin companies are not licensed when running a custodial exchange for in-state customers.
Montana has no money transmission laws and there is no indication that bitcoin regulations will be imposed in the future. In June New Hampshire Governor John Sununu signed a bill that exempted anyone who uses “virtual currency” from registering, as news.Bitcoin.com reported. The state effectively deregulated bitcoin after previous legislation had targeted cryptocurrencies with tougher regulations.
If adopted, the law to legalize cryptocurrency payments for taxes in Arizona will be country’s first. A similar legislation was voted down in New Hampshire two years ago with concerns like those expressed by the Senate Minority Leader in Phoenix. State Representative Eric Schleien (R), who introduced the NH bill, explained there would be no cost and no risk to the state, as conversion to dollars would be automatic to eliminate concerns about crypto volatility. If Arizona lawmakers approve the proposed amendments, the Grand Canyon State may start collecting taxes in bitcoin within two years.
Do you think that if Arizona accepts bitcoin as legal tender, other states will do the same? Tell us in the comments section below.
Images courtesy of Shutterstock.
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