Most US states have adopted some regulatory stance in regards to cryptocurrencies like bitcoin and the blockchain technologies behind them, according to a report by the Brookings Institution. The study classifies jurisdictions according to their attitude towards digital currencies and the levels of engagement with the underlying technology.
Two Waves of Regulations in Four Years
State governments are at various stages of implementation of crypto and blockchain technologies. Some of them have not yet introduced regulatory regimes to take full advantage of them. Most, however, have shown interest in leveraging these technologies to stimulate local economies and improve public services. The authors have identified two waves of new crypto-related regulations in the last several years.
The first wave started in 2014, with more than 20 states adopting relevant legislation. At that first stage, authorities in at least 10 states, like California and New Mexico, issued warnings about investing in cryptocurrencies. The second one came in the last two years when a large group of states started exploring the potential implementation of blockchain technologies in the public and the private sector.
One of these states is Colorado, where a cautionary approach has led to the adoption of a bipartisan bill promoting the use of blockchain for government record keeping. Wyoming has been mentioned as a state seeking broader impact on the state economy. Recently, its legislature passed a bill exempting cryptocurrencies from property taxation, as news.Bitcoin.com reported. The state has been praised for becoming the most crypto-friendly jurisdiction in the country.
Two other states have taken steps to legalize bitcoin as a payment option for taxation purposes. Arizona has promised to become the first US state to start accepting taxes in cryptocurrency. Several bills recognizing cryptos as currencies have been making their way in the state legislature. Two of them regulate income tax payments with cryptos. Georgia may also provide its residents with the option to pay taxes in bitcoin. A draft that allows digital currency payments for tax obligations and licensure fees has been filed in the senate.
Many state legislatures have introduced regulations mostly clarifying matters related to the exchange of cryptocurrencies and the application of existing money transmission laws. Nevertheless, the majority of US states have taken at least some form of regulatory stance concerning cryptocurrencies and the blockchain technology, as the researchers point out.
From “Unaware” to “Recognizing Innovation”
The report, titled “Blockchain and US State Governments: An Initial Assessment”, classifies US jurisdictions according to their attitude towards cryptocurrencies and the levels of engagement with the blockchain technology. The authors have divided states into several groups – Unaware, Reactionary, Appreciative, Organized, Actively Engaged, and Recognizing Innovation Potential.
The first group consists of states which have not taken any actions to adopt relevant regulations, such as Arkansas and South Dakota. The document notes, however, that in some of these “unaware” states there are substantial crypto-related activities within the private sector and the academia. States that have taken a negative stand against cryptocurrencies or have flagged them as potentially risky are considered “reactionary”. These include Indiana, Iowa, and Texas.
North Dakota is among the “appreciative” states, as its government has already initiated a legislative process but has not adopted any new bills yet. “Organized” states like Washington and New Hampshire have already passed new laws concerning the crypto ecosphere.
Seven states are included in a group called “Active Engagement”. According to the Brookings Institution, they have gone beyond cryptocurrencies and examined the governmental use of blockchain. The authors are talking about both isolated applications and integration across different government functions. A good example is Vermont where blockchain-stored data is recognized and accepted by the court system.
Several other states “envision a broader role for blockchain in their economies”. These are states like Delaware, hosting many Fortune 500 companies and numerous startups, and Illinois, which aims to utilize distributed ledger technologies to “redefine the relationship between government and citizens”. Arizona, where signatures, transactions, and contracts on a blockchain are legally valid, also falls in the category of states “recognizing the innovation potential” of crypto technology.
Do you agree that most US states will probably accept and regulate cryptocurrencies and blockchain technologies before they are legalized on a federal level? Tells us in the comments section below.
Images courtesy of Shutterstock, Brookings.
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Author: Lubomir Tassev