The First US State allows Payments of Taxes in BitcoinNovember 27, 2018
The price of the world’s largest cryptocurrency, like almost all others, is tumbling down but the bitcoin network recently got really good news from the legal domain. In a move that left many in wonder, the US state of Ohio became the first to start allowing its companies to pay their taxes in BTC.
The development has been hailed throughout the bitcoin community as a game-changing event in the US. Naturally, there is a lot of attention from the international media, along with the huge interest from the global crypto community.
In the follow-up after the decision of the lawmakers, many are examining the possibilities of the same development not just in the US, but for the entire bitcoin ecosystem, especially in the relation to the price struggle that is currently taking place in the extremely bearish cryptocurrency market.
Will the Ohio ruling shows a change in the overall attitude towards bitcoin or will it be just another stepping stone in the conscious process of crypto validation in the public consciousness? Here are some of the most important facts about this event and its impact on the crypto community.
The Ohio Decision
The news about the decision in Ohio came through a report that was published in the Wall Street Journal. According to it, starting with late November, companies in the same state will be able to use BTC to pay a range of taxes. These include tobacco sales tax and go all the way public utility taxes and employee withholding tax. The process of filing will include three separate steps. First, the business will be obliged to register with the Office of the Ohio Treasurer.
For this, they will need to use OhioCrypto.com. Here, they will be able to input tax details, including the tax period and payment amount. Finally, they will attain the due amount that should be paid in bitcoin through the use of a compatible crypto wallet. These currently include wallets from the Bitcoin Core, Mycelium and also the breadwallet, as well as all others that are compatible with the Bitcoin Payment Protocol. All of the tax payments will be processed using the BitPay, an Atlanta-based bitcoin payment processor. It will convert all of the bitcoins into US dollars for the Treasurer’s office.
The system as of this moment seems very encompassing and includes all of the relevant elements of any type of tax payment procedure. The state of Ohio does not seem to want to keep hold of its bitcoin revenue so far, but as the well-known example of the sheriff’s department in the US that start mining bitcoin shows, the local government is nothing but remorseful. Once Ohio has bitcoin in its possession, it can do with it what it pleases – currently, it seems that it will be converted completely, but the same does not have to be forever.
State’s Future Plans
For now, the facility of bitcoin tax payments is offered only to businesses. However, the state plans to provide the same service to individuals at some point in the future. Similar to esports, social media and other digital-first venture, the potential to scale up is there are readily available. It is only a question of the organization behind such decision and how fast can it be implemented.
From the perspective of the technical requirements, the process of moving to individual tax payments should be a walk in the park. The same goes for BitPay and their infrastructure. Thanks to all of this, the legislator and regulators in Ohio just need to decide when do they want the same service for their citizens. Once they do, it will be up and operational in no time at all.
Wider Trend in US Lawmaking
Ohio might be the first to introduce this option, but it is not the only one that has considered it. Other US states have explored the same option in the past. Arizona and Illinois have weighted the proposal to allow their residents to pay taxes in BTC in March this year. A month before that, Georgia was considering this option as well. In Arizona, the lawmakers scrapped the plan thanks to weak support for the proposal.
The proposal in Georgia stalled because of the lack of insight and understanding about cryptocurrency, as Senator Mike Williams reported in April. Ohio, on the other hand, has been working on bringing aspects of blockchain tech into local law. Recently, the state recognized storing data and using the on-chain transactions for this tech.
This allows any device to use electronic signatures that are enforced by the blockchain technology. It also recognizes the same signatures as any other valid electronic marking of authorship. At the same time, lawmakers in the state started to present their region as a future blockchain development hub. The desire was to attract both companies and blockchain development to Ohio.
Ohio made a very important decision when it decided to recognize bitcoin in this manner. The fact that it comes after a process of wider blockchain legalization is also important because it showcases that the legislators wanted to work from the ground up and have a sufficient knowledge of the tech behind the BTC. Both facts are refreshing for any lawmakers in the world, but especially for a huge market like the US, which continues to be the key player in blockchain development and price movements.
At the same time, the potential gains for the state are huge. Like already mentioned, it could easily decide to keep some of its taxes in bitcoin and simply apply the HODL technique of keeping onto it until it reaches a particular value. The infrastructure for this would be minimal, while the same department of crypto investment could, in a couple of years, make several times the money that initially went in.
The economic opportunity for this would be tremendous and showcase how the highest level of government could take part in the booming crypto economy. Hopefully, even the plummeting prices of crypto that are currently taking place will not dampen the profit-making potential for Ohio and other states that decide to do this. After all, the logical end of this process is the eventually legal recognition of bitcoin itself, which is currently the Holy Grail of the developer community.