Ohio could soon join the growing list of states accepting cryptocurrency for tax payments, as a new bill introduced by Senator Niraj Antani seeks to open the door for digital currencies in state transactions. If passed, the legislation would allow Ohio to accept cryptocurrencies for the payment of state taxes and fees and grant state institutions of higher education and the state pension fund the ability to invest in cryptocurrency.
Key Details of the Bill
The bill, introduced on Sept. 30, directs the state tax commissioner to decide which cryptocurrencies will be accepted for payments each year. By June 30 of each year, the commissioner would make this determination, allowing for flexibility in which coins are approved for state transactions.
The law specifies that cryptocurrencies can be used for a variety of state-related payments, including:
- Taxes
- Fees
- Costs
- Charges
- Assessments
- Fines
- Any other state expense
The bill also allows state entities to charge a service fee for cryptocurrency transactions, providing a way for the state to cover any additional processing costs.
Exclusion of Central Bank Digital Currencies (CBDCs)
Notably, the bill excludes Central Bank Digital Currencies (CBDCs) from being considered as “cryptocurrency.” A clause in the bill reads: “‘Cryptocurrency’ does not include a national currency,” effectively differentiating CBDCs from decentralized cryptocurrencies like Bitcoin and Ethereum. This move reflects growing concerns about government-backed digital currencies, which are often seen as a more controlled and centralized form of digital money.
The legislation defines cryptocurrency as “a digital representation of value for which there is a reasonable expectation that it will maintain a stable value relative to a fixed amount of monetary value,” indicating a preference for stablecoins or well-established cryptocurrencies rather than volatile tokens.
Ohio’s Previous Crypto Experiment in 2018
This is not Ohio’s first attempt to integrate cryptocurrency into state operations. Back in 2018, Ohio became the first state in the U.S. to accept cryptocurrency for tax payments through a platform called OhioCrypto.com, which allowed businesses to pay their taxes with Bitcoin. However, the initiative was short-lived. In 2019, the Ohio State Board of Deposits failed to fully endorse the program, and it was eventually shut down due to a lack of enthusiasm from state officials. Antani’s new bill aims to revive and expand Ohio’s involvement in the crypto space by bypassing the board and making it a legislative matter.
Antani criticized the State Board of Deposits for its failure to act, saying:
“This policy should have been acted on by the State Board of Deposits when it was deemed necessary. Since they have failed to act, the legislature will.”
Ohio’s Role in the Broader Crypto Landscape
While Ohio would become one of the first states to formally pass such legislation, only Colorado currently accepts cryptocurrency for tax payments. In 2022, Colorado’s state government launched a pilot program allowing residents to pay taxes with Bitcoin and Ethereum through a partnership with the payment processor PayPal. However, the use of crypto for taxes remains limited in the U.S., with most states sticking to traditional payment methods.
In addition to the tax payments bill, Ohio is also considering other bills aimed at regulating the cryptocurrency mining industry and clarifying the legal status of CBDCs.
Implications for Ohio and Beyond
The potential for Ohio to accept cryptocurrency for taxes could set a precedent for other states looking to integrate digital assets into their public finance systems. By allowing state universities and pension funds to invest in crypto, the bill opens up new opportunities for crypto adoption in government-backed institutions.
However, the move also raises questions about regulation and security. As more states explore the use of cryptocurrency in government processes, concerns about market volatility, fraud, and the technical challenges of managing crypto payments could become key issues for lawmakers.
Conclusion
Ohio’s push to accept cryptocurrency for tax payments and investments represents a significant step toward broader acceptance of digital currencies in state operations. If the bill passes, Ohio could pave the way for other states to follow suit, potentially expanding the use of cryptocurrencies in government transactions and institutional investments.
With its history as a pioneer in this area and its renewed push for crypto adoption, Ohio is positioning itself as a key player in the cryptocurrency regulatory landscape. However, the success of this initiative will depend on the state’s ability to overcome the challenges that hindered its earlier attempts.
