Colorado To Accept Crypto for Tax Payments This Summer

Beginning as early as June, Colorado residents will be able to pay their state income taxes using Bitcoin and Ethereum cryptocurrencies, Gov. Jared Polis announced Wednesday, Feb. 23, making Colorado the first state to accept crypto for taxes. The state will take the digital coin payment and convert the equivalent dollar amount, in real time, into the state’s treasury to avoid problems with crypto’s volatility. 

This action is “important symbolically to show that we are a crypto-forward state,” Polis said while attending ETHDenver, a cryptocurrency conference held at Sports Castle on Feb. 18. 

Colorado crypto

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Polis stated in an Instagram post that Colorado has been “laying the groundwork to be a center of crypto and blockchain innovation for a number of years.”

“We see it as a critical part of Colorado’s overall innovation ecosystem,” Polis said.

Colorado was amongst the earliest to use blockchain technology for government infrastructure. In 2014, following a ruling by the Federal Election Commission (FEC), Polis accepted Bitcoin donations for his re-election campaign to the U.S. Congress. He was one of the first politicians to accept digital currencies as donations for an election campaign, and he founded the Congressional Blockchain Caucus while in office. 

In the 2019 city election, Denver used blockchain technology to allow military and international voters to cast their ballots securely. That year, Colorado was the first state to hire a chief blockchain architect, Thaddeus Batt, and the Digital Token Act was signed into effect.

Since then, Polis has remained vocal in his interest in making Colorado the “first digital state in the U.S.” and establishing ColoradoCoin, a state token that would work as cryptocurrency and run on a blockchain like Ethereum. 

Colorado crypto

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During an interview with Kate Rooney on CNBC Crypto World on Feb. 15, Polis said that later in the year, residents may be able to purchase vehicle registration, driver’s licenses and hunting or fishing permits through crypto transactions. 

Polis has not commented on the negative aspects of crypto. 

Critics of crypto acceptance express concern for the environmental impact of the mining process. Mining is only one way that crypto transactions are validated and new digital coins are created, but it is used by many leading cryptocurrencies like Bitcoin, and it requires a significant amount of electricity. 

A single transaction may consume the same amount of power the average American household does in over 72.2 days. Bitcoin mining generates around 96 million tons of carbon dioxide emissions per year. 

Arizona and California are proposing laws that would make crypto a statewide accepted form of payment — not just for taxes.