Paying Taxes in Bitcoin Is Possible, Boosts Usage Case

Expanding the use case of cryptocurrencies is integral to the fortunes of bitcoin, other digital currencies, and crypto-correlated stocks. The viable ones, at least.

Viewed differently, the more legitimate avenues bitcoin can gain a foothold in payment, the better. Whether it’s something as mundane as buying groceries with digital currency or larger purchases like cars or homes, the greater the acceptance of bitcoin as a mode of payout is wider, the better for digital assets and exchange-traded funds such as the Invesco Alerian Galaxy Crypto Economy ETFs (SATO ).

What if you used bitcoin to pay your taxes? The idea is still in its infancy, but Colorado is taking the lead. This state’s Department of Revenue recently announced that it allows residents to pay personal income tax, business income tax, sales and use tax, withholding , departure tax and fuel excise tax with cryptocurrency.

“Only PayPal personal accounts can pay using cryptocurrency. PayPal Business accounts cannot pay using cryptocurrency at this time,” according to the Colorado Department of Revenue. “You must have the full value of your invoice in a single cryptocurrency in your PayPal Cryptocurrencies Hub.”

Clearly, Colorado residents and business owners who want to pay taxes in crypto must have a PayPal account. Accordingly, it is reasonable to assume that the only cryptocurrencies the state will accept as forms of tax payment are bitcoin, ethererum, litecoin, and bitcoin cash, the only digital currencies available for purchase on PayPal.

There are advantages for PayPal, which accounts for almost 1% of the SATO list, in the Colorado scenario. Taxpayers who choose to use crypto must pay a flat fee of $1 and 1.83% of the transaction amount, a portion of which is likely to be transferred to PayPal.

“Fees such as PayPal purchase fees, when purchasing cryptocurrency through PayPal, or miner/gas fees, when transferring cryptocurrency from an external wallet to your PayPal Cryptocurrencies Hub, may apply,” the Department of Revenue added.

Although Colorado has not commented to this effect, it is possible that as the PayPal/crypto offer grows in popularity, the state could expand the offer to include Block (NYSE:SQ). Block is a direct competitor to PayPal and allows users to buy and store bitcoins on the platform. This stock represents 3.12% of the SATO listing.

For more news, insights and strategy, visit the Crypto Channel.

vettafi.com is owned by VettaFi, which also owns the index provider for SATO. VettaFi is not the sponsor of SATObut the subsidiary of VettaFi receives an index license fee from the ETFs sponsor.

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