Colorado authorities have announced that state residents can now pay their taxes with cryptocurrency instead of fiat currency. Among the digital assets supported, the two largest by market capitalization are Bitcoin (BTC) and Ether (ETH).
However, the Colorado Department of Revenue is not allowed to accept direct crypto payments, which is why it has partnered with PayPal, which will help with transactions.
Colorado’s groundbreaking move
State officials have revealed that Colorado residents can now use cryptocurrency as payment for corporate income tax, individual income tax, sales and use tax, severance tax, withholding tax, and fuel tax. In addition to Bitcoin and Ether, individuals can also use Bitcoin Cash and Litecoin.
“Cryptocurrency has been modified as an additional payment option for taxpayers willing to complete their online transactions to pay state taxes on Revenue Online,” said spokesperson Daniel Carr.
The Revenue Department cannot accept direct digital asset settlements, so it has merged with multinational financial technology company PayPal. It will act as an intermediary for each transaction, converting cryptocurrencies into US dollars, which means that consumers will have to pay a certain fee for this service.
The move made Colorado the first US state in which individuals can use digital assets to pay taxes. Utah is the only other state in which such steps are taking place, and work is expected to begin in early 2023.
In 2018, Ohio also announced similar intentions. But after Attorney General Dave Yost argued that it wouldn’t benefit the local financial system, authorities withdrew their plans.
Cryptographic initiatives in other US states
Colorado is not the only state where the cryptocurrency sector is booming. In Florida, for example, Miami Mayor Francis Suarez tried to lure bitcoin miners by providing them with cheap nuclear power.
The political leader, a staunch supporter of the underlying digital asset, also argued that Miami should be turned into a crypto hub, while BTC should be integrated into all aspects of society.
The Mayor of New York – Eric Adams – is also fond of the digital asset industry. He promised to receive his first three salaries in bitcoin, while later believed that blockchain technology and its benefits should become a topic in schools.
Last but not least, in early 2022, Senator Wendy Rogers of Arizona introduced a bill that could make bitcoin legal tender in the region. If approved, Grand Canyon State will be the first for BTC to be an official payment method.
Colorado becomes the first US state to accept taxes in BTC and ETH: the report first appeared on CryptoPotato.