Category Archives: Arizona Cryptocurrency News

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US Cryptocurrency Holders Could Owe $25 Billion in Taxes

Tom Lee, former chief equity strategist for JP Morgan Chase, has often provided insights on the cryptocurrency market and Bitcoin; in a recent CNBC interview, he estimated that cryptocurrency holders in the United States owed around USD 25 billion in capital gains taxes.

US tax date impacting market

Lee believes that the present cryptocurrency sell-off is in anticipation of the looming US tax day on 17 April; he also believes that sometime after this date, “market misery” and selling pressure will begin to alleviate, pushing the market back up.

On 23 March, the Internal Revenue Service (IRS) released a notice describing its treatment of cryptocurrency as virtual currency and, therefore, general property taxation principles and laws were applicable. The small reminder from IRS may be partly responsible for the present sell-off which is profoundly impacting the market.

“This is a massive outflow from crypto to USD, and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value,” Lee added in the CNBC report.

Wheels spinning in the USA

The US is undergoing a shift of attitude toward Bitcoin and cryptocurrency practices overall. Since February, the state of Arizona has been passing realistic and promising bills through the Arizona House of Representatives which would reshape how the state interacts, regulates and utilizes cryptocurrencies as well as initial coin offerings (ICOs).

The HB2603, HB2602, and HB2601 bill package, if finally voted law, would mean that Arizona would be the first state to accept cryptocurrency as payment for taxes. Providing a legal definition for tokens and amending old legislation would protect individuals who run blockchain nodes, which is primarily an issue of energy costs caused by computing power.

There is an oddly positive tone emanating from the US; BitcoinNews recently reported that Jay Clayton, chairman of the US Securities and Exchange Commission (SEC) had begun to change his tone on ICOs. He aptly identified the need for lawmakers and regulators to tackle fraudulent blockchain activities to prevent the legal frameworks from restricting “the capacity of this new security”.

In another turn of events, cryptocurrency firm Coinbase is reportedly “in talks” with SEC in regards to the trading platform becoming a licensed and regulated virtual money entity.

If Tom Lee is correct, capital gains tax made from cryptocurrency this tax period will account for about 20% of the US total. If these estimations are anywhere near accurate, it could be an indication to the government to seriously consider blockchain technologies and their accompanying cryptocurrencies as a vital fabric in the weave of technological and financial advancements of the future.

 

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Arizona Lawmakers Gearing Up to Pioneer State-Wide Regulated Blockchain Industry

The state of Arizona has officially signed into law a bill that allows for corporations to hold and share data on a blockchain. First introduced in February by state representative Jeff Weninger, the bill is intended “to open the door for emerging technologies in Arizona”.

Over the past two months, Arizona has been making headlines following numerous blockchain-related reports. Firstly in early March, the Arizona House of Representatives gave passage to a bill which was initially introduced in January. It has not yet been voted into law, however, if passed, it would make Arizona the first US state to accept payment for taxes in “Bitcoin or other cryptocurrency”.

A brief timeline of events

Jeff Weninger also sponsored House Bill 2602, which in February was passed. The bill would provide protection against any form or local regulation for users who are running blockchain nodes; the bill states: “a city or town may not prohibit or otherwise restrict an individual from running a node on blockchain technology in a residence.”

Weninger was also at the helm of two more blockchain bills. In February, the Arizona state representative began paving the regulatory framework for initial coin offerings (ICOs) in the state. The first bill defined “virtual coins” as “a digital representation of value that can be digitally traded and that functions as a medium of exchange, unit of account and store of value”.  The second bill made amendments to the Arizona Revised Statutes, which is to account for data that is written and stored on a blockchain.

By the end of March, controversy struck when an Arizona Bitcoin trader was convicted for five accounts of money laundering. On 28 March, Thomas Mario Costanzo was jailed for accumulating over USD 164,000 in cash made from narcotics, exchanging it into Bitcoin and further selling and distributing illegal substances using Bitcoin as a preferred method of payment via internet purchases.

The efforts made were not stifled by the Bitcoin controversy; typically a Bitcoin scam/scare can cause regulators and lawmakers to come down hard on the technology, but not in Arizona.

A year after, the state began accepting smart contracts as legal documentation and recognizing signatures recorded on a blockchain. Arizona is finalizing proceedings with the HB2603, HB2602, and HB2601 bill package that together can demonstrate to the rest of the United States that it is possible to integrate and regulate blockchain technology state-wide.

Arizona leading the way

Other states have not been so fortunate. Both New Hampshire and the state of Georgia failed to pass a bill that was to require the state to accept cryptocurrencies for payment of taxes and license fees. In Georgia, it was supposedly held back by a lack of understanding and education on the benefits that blockchain technology could bring.

Though that is not to say that new legislation and regulations are entirely off the cards for any of the states; Arizona has the opportunity to set the standard for the rest of the nation and demonstrate the beneficial potency of a regulated blockchain industry.

 

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