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Colorado starts accepting bitcoin as tax payments

Governor Jared Polis said on Wednesday that Colorado will be the first state to accept cryptocurrencies as payment for state taxes and fees. Polis stated that the state, which was also one of the first to deploy blockchain technology for government infrastructure, will accept digital coin payments and deposit the equal value in dollars into the state’s treasury. “For a number of years, we’ve been creating the infrastructure in Colorado to be a centre of crypto and blockchain innovation,” Polis said in a statement. “It’s an important aspect of Colorado’s broader innovation ecosystem,” he added.

Legislators in other states, including as Arizona and California, are introducing bills that, if passed, would make cryptocurrencies an approved form of payment throughout the state, not just for tax purposes. Governor Polis has long been a trailblazer in the worlds of cryptocurrencies and politics colliding. Following a favourable judgement by the Federal Exchange Commission, he accepted Bitcoin for campaign donations during his 2014 race for the United States Congress.

Although Colorado will be the first state to accept cryptocurrency payments for tax payments, Ohio tried out a similar programme in 2018, but it was considered ineffective and abandoned in 2019. El Salvador, outside of the United States, has been on a similar course for the past nine months. The country’s Legislative Assembly enacted a measure making Bitcoin legal tender in June 2021, allowing it to be used for ordinary transactions.

Accepting bitcoin has its detractors, who point to the volatility of digital currencies and inflation fears as reasons why the effort might devastate El Salvador’s economy. The International Monetary Fund (IMF) urged the Central American country to reconsider its decision in January. Throughout the pandemic, cryptocurrency investment and interest have soared, with Bitcoin—the original digital currency—gaining more than 300 percent between March and December 2020, only to plummet over 45% from an all-time high in November 2021.

Polis has stated that he wants the state to be able to process and accept bitcoin by the summer, although he has not provided a more precise schedule.