Colorado to become the first state to accept cryptocurrency as payment for taxes

Colorado will become the first state to accept cryptocurrency as payment for state taxes and fees, Governor Jared Polis announced Wednesday. Polis said the state, which was also the earliest to use blockchain technology for government infrastructure, will take the digital coin payments and deposit the equivalent value in dollars into the state’s treasury. “In Colorado, we’ve been laying the groundwork to be a center of crypto and blockchain innovation for a number of years,” Polis said in a statement. “We see it as a critical part of Colorado’s overall innovation ecosystem.” The announcement comes as legislators in other states, including Arizona and California, are proposing laws which, if ratified, would deem cryptocurrency an accepted form of payment statewide, not just for tax purposes. Governor Polis has long been a vanguard in the intersecting world of cryptocurrency and politics. In 2014, he accepted Bitcoin for campaign donations during his run for the U.S. Congress following a Federal Exchange Commission ruling that went in his favor. Although Colorado will be the first state to officially welcome cryptocurrency payments for taxes, Ohio implemented a similar program for a test run in 2018, which was ultimately deemed unsuccessful and abandoned in 2019. Outside the U.S., El Salvador has been on a similar path for the better part of nine months. In June 2021, the country’s Legislative Assembly passed a law that made Bitcoin legal tender, allowing it to be used for everyday purchases. Critics of accepting cryptocurrency highlight the volatility of digital currencies and inflation fears as reasons the initiative could cause economic destruction in El Salvador. In January, the International Monetary Fund called for the Central American nation to reverse its decision. Cryptocurrency investment and interest have skyrocketed throughout the pandemic, with Bitcoin—the original digital currency—seeing gains of more than 300% between March and December 2020, only to crash down almost 45% from an all-time high in November 2021. Polis has expressed an interest in having the state be able to process and accept cryptocurrency by the summer, although he has yet to provide a more specific timeline.