Colorado Residents Can Now Pay Taxes With Cryptocurrency

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Arjun Singh Contributor
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Colorado will allow residents to pay their taxes in cryptocurrency, Democratic Gov. Jared Polis announced Monday.

Polis, who is running for re-election in November, said that residents of Colorado may use cryptocurrencies to pay any type of state tax – including sales taxes, severance taxes, excise taxes and income taxes for both individuals and businesses – beginning this fiscal year. The state will collect payments online and deposit the equivalent U.S. dollar amount into the state’s treasury.

The announcement did not specify which cryptocurrencies would be eligible and whether there would be any restrictions on the use of crypto. Currently, there are over 20,000 cryptocurrencies in circulation around the world, according to entrepreneurship research firm Exploding Topics.

“We’re just showing again, from a customer service perspective, how Colorado is tech-forward in meeting the ever-changing needs of businesses and residents,” Polis said at the opening ceremony of Denver Startup Week.

Taxpayers have the option of making payments using PayPal’s Cryptocurrencies Hub, which charges a 1.83% service fee for all transactions and only supports Bitcoin, Bitcoin Cash, Ethereum and Litecoin, according to the Colorado Department of Revenue’s website. Only personal accounts, and not business accounts, can make crypto payments at this time and all payments need to be made in one cryptocurrency.

Polis’s announcement follows a promise he made in April to implement crypto payments for state taxes. He has long been a proponent of integrating cryptocurrencies with public affairs and was the first candidate for Congress to accept donations in crypto in 2014 after the Federal Election Commission ruled it permissible.

The decision is Colorado’s latest move to increase the use of cryptocurrencies in the state. In 2019, Polis signed into law a measure that exempts cryptocurrency from registration as “securities,” allowing them to be exchanged more freely.

Polis has also sought to use blockchain technology, a cryptographical technology that forms the basis for cryptocurrencies, in the state. A state blockchain council, created by Polis’s predecessor John Hickenlooper, released a report in 2020 that recommended loosening regulations on crypto’s use and training state officials, such as judges, to become familiar with crypto.

Few other jurisdictions have sought to integrate cryptocurrencies with public functions. In 2021, El Salvador made Bitcoin legal tender in the country, allowing it to be used for everyday purchases in an effort to replace the U.S. dollar as the country’s currency.

Critics of cryptocurrencies, however, have pointed out that their volatile value makes them too risky to be used for official purposes. The dollar value of Bitcoin has fluctuated by over $4,000 in September and declined by over $30,000 since March, with a current exchange rate of $18,897.30 to one Bitcoin.

Polis’s office did not respond to a request for comment from the Daily Caller News Foundation.

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