In a rare governmental show of support for the volatile cryptocurrency, the US state of Ohio will now allow businesses to pay their taxes using bitcoin.
From November 26, Ohio businesses will be able to register online to pay for all kinds of corporation tax using bitcoin. The scheme will later be rolled out to individuals.
To make the bitcoin payments, businesses will input tax details into a dedicated portal called OhioCrypto.com. These will be sent to an Atlanta-based processor named BitPay, which will convert the currency to dollars.
State Treasurer Josh Mandel, a bitcoin enthusiast who has held the position since 2011, is behind the new cryptocurrency initiative. He told the Wall Street Journal that he views it as an opportunity for “planting a flag” in the currency’s adoption.
Although Ohio’s incentive doesn’t give bitcoin legal status as an official currency, it will legitimise its use at state level
“I do see [bitcoin] as a legitimate form of currency,” Mandel said, adding that he hopes other states will follow in Ohio’s footsteps. Arizona, Georgia and Illinois have all previously considered using bitcoin for taxes, but have been held back by state legislature.
At its release in 2009, bitcoin was pegged as a decentralised alternative to traditional currencies that did not require government support or backing. Despite rising dramatically in value since its inception, use of the cryptocurrency has largely been limited to specialist exchanges and it is not widely accepted as a valid currency.
Although Ohio’s incentive doesn’t give bitcoin legal status as an official currency, it will legitimise its use at state level. Mandel’s rank as an elected official means his office can accept bitcoin without requiring approval from state legislators or Ohio’s governor.
Other individual states are also beginning to recognise that accepting bitcoin marks them as technologically progressive, allowing them to attract new business and workers.
New York has long been a pioneer in the field, introducing a business licence in 2014 that allows businesses to trade, store, control and issue virtual currencies.
States such as Wyoming are now following suit, with Governor Matt Mead opting to increase regulatory leniency earlier in the year to persuade bitcoin-based businesses to register and operate in the state.
State backing will provide a welcome demonstration of encouragement for bitcoin, which has been dogged by extreme price fluctuations in recent months. After reaching a peak valuation of $15,000 per coin in December 2017, the currency has steadily been falling in value, with each coin worth around $3,900 at the time of publication.
The cryptocurrency has also suffered as a result of concerns that it could be used to fund criminal activities. Its decentralised nature means it is difficult for law enforcement officials to keep track of payments made, leading to issues with regulatory control. Ohio’s initiative will prove that the cryptocurrency has valuable, legitimate uses, helping to distance it from speculation about illegal transactions.