Paying taxes with cryptocurrency might seem strange given Bitcoin’s anarchist roots. However, a closer examination shows that crypto could indeed be perfect for taxation.
Authorities in Ohio have recently decided to accept Bitcoin, with companies like Overstock considering paying taxes with cryptocurrency. Other governments could soon follow suit given how quickly regulators are moving to support digital currencies.
Past attempts to pay taxes with cryptocurrency
So far, few jurisdictions have seriously considered the potential of paying taxes with cryptocurrency. In the U.S., Arizona, Illinois, and Georgia all passed relevant legislation through the Senate. However, the House of Representatives denied the proposals in all three cases.
Across the pond, European governments have taken a largely cautious approach towards Bitcoin as a payment method. That said, some prominent figures have been vocal in their support of paying taxes with cryptocurrency. Eddie Hughes, the MP for Walsall North in the U.K., is one of those. On December 10, 2018, Hughes expressed his belief that people will soon start paying taxes with cryptocurrency.
Ohio showing the way
In the wake of several unsuccessful trials, Ohio and Overstock provided some much-needed support for crypto taxation. The state’s authorities have recently allowed individuals and businesses to pay taxes with cryptocurrency. Businesses need to register with the treasurer’s office, provide tax-relevant details, and pay through a compatible wallet platform.
It seems U.S. retail company Overstock could be the first to take advantage of this. On January 3, 2019, the company announced that it intends to pay taxes with cryptocurrency. Overstock would use BTC to settle commercial activity taxes (CAT) through OhioCrypto platform. The company’s CEO, Patrick Byrne, said the government’s friendly approach towards crypto could help it stay ahead of global competition.
Thoughtful governmental adoption of emerging technologies such as cryptocurrencies … is the best way to ensure the U.S. does not lose our place at the forefront of the ever-advancing global economy.
Bypassing the Great Wall of China
When China banned cryptocurrency-related activities, many other governments followed suit. Bangladesh, India, and several other large countries mimicked China, pushing digital coins into a gray area. As such, it appears certain these governments won’t accept crypto any time soon.
Now, the question is whether other countries will follow China’s harsh approach, or whether they’ll encourage crypto like the U.S. Indeed, with some local governments now embracing the technology, paying taxes with cryptocurrency may not be that far off. Ohio’s decision might just provide the push required for other tax agencies around the world to consider accepting Bitcoin.