Polis: Colorado aims to accept cryptocurrency for state tax payments 'by this summer'
(The Center Square) – Governor Jared Polis said Colorado is aiming to accept cryptocurrencies for some state tax payments “by this summer” during an interview with CNBC.
The concept comes as state lawmakers seek to simplify and reduce taxes across the board in Colorado after the state received billions in federal coronavirus relief funding. Some of the measures being debated in the General Assembly include reducing the state income tax rate, creating a tax deduction for rent payments, and developing new state tax credits for affordable housing and health care.
Polis told CNBC that crypto is already exempt from Colorado’s state securities laws, though it is still governed by federal laws. The state was also one of the first in the country to hire a blockchain architect to oversee blockchain activities in the state, according to the governor.
He added that the state would not hold the cryptocurrency it receives as tax payments. Instead, it would immediately convert the holding to fiat currency through an intermediary in real-time. Polis said this would help cut down on the state’s exposure to the asset’s inherent volatility.
The payments would initially include state sales and income taxes but could later be expanded to include fee payments for things like driver’s and business licenses.
“It would be just like accepting a credit card [payment], only with lower transaction cost than a credit card,” Polis said.
The governor also spoke about Colorado developing a “city coin” – a digital currency that allows people to invest in cities while earning bitcoin for themselves. Miami, Florida was the first city to adopt the technology and New York City is reportedly working on its own coin as well.
Even though Polis doesn’t have jurisdiction over any city government, he described the prospect of cities developing the coin as “a bright future.”
Sen. Chris Hansen, D-Denver, is currently sponsoring a bill in the General Assembly that would allow Denver to create its own city coin for revenue purposes.
“I think we can benefit from it, not only in terms of payments, reducing transaction costs, and reducing friction, but also in terms of creating new asset classes to satisfy reserve requirements, keep accounts, and protect people’s privacy,” Polis said.