US State of New Hampshire Looking to Legalize Bitcoin for State Payments
Plans are afoot to legalize Bitcoin in the U.S. state of New Hampshire, enabling residents to make state payments using the original cryptocurrency. A group of lawmakers in New Hampshire are negotiating a bill that would see state payments, such as fees and taxes, legally payable in Bitcoin. The New Hampshire House Bill 470 is being discussed in local government as we speak.
The initial public hearing regarding the bill took place at the end of January, with a final decision on whether the state’s lawmakers will pass the bill to be made on 14th March. Whether or not Bitcoin will be legalized is still up in the air, given that only the Republican party has so far expressed support for the New Hampshire House Bill 470. Republican politicians, Dennis Acton and Michael Yakubovich opted to sponsor the bill, which would “develop an implementation plan for the state to accept cryptocurrencies” for state payments “after July 1, 2020”.
It is not the first time that New Hampshire has attempted to get a bill passed to recognise Bitcoin and other cryptocurrencies as a legal form of state payment. In 2015, Republican representative, Eric Schleien proposed a bill that would enable the state to accept Bitcoin for taxes. Should this latest attempt to legalize Bitcoin be passed, it would represent a seismic shift in America’s attitude towards cryptocurrency at a government level.
Last year, Lael Brainard, a governor on the Federal Reserve Board, criticized cryptocurrencies and their lack of transparency. Although her speech at San Francisco’s Decoding Digital Currency Conference was positive about the merits of blockchain technology, with the blockchain sphere innovating at events such as the Malta Blockchain Summit, Brainard remained sceptical about the long-term usefulness of cryptocurrency. Ms Brainard pointed to the volatility of Bitcoin and other altcoins in recent months as to why crypto coins could not be utilized as a store of value or a unit of account.
Given the large-scale opinion of Bitcoin and cryptocurrencies as a whole among US political officials, it’s unsurprising that Bitcoin remains prohibited in many burgeoning online industries. Bitcoin casinos are technically banned in most states, while Bitcoin sportsbooks are also illegal. However, the successful adoption of Bitcoin in real-life scenarios such as New Hampshire’s state payments would surely see officials to a different approach long-term.
The legal use of cryptocurrency to pay for state taxes has already been in action in the state of Ohio. Residents here have been able to pay 23 kinds of business taxes in Bitcoin, including sales and utility tax, since November 2018. New Hampshire’s legislators will have been watching Ohio with interest of late, with the state partnering with Bitpay, the world’s leading cryptocurrency payment services provider, to convert all Bitcoin payments made by residents into U.S. dollars.
Wyoming is another U.S. state looking to adopt a more progressive attitude towards cryptocurrency, by introducing a bill to legally define cryptocurrency as a form of money. The bill empowers banks within the state to “provide custodial services for digital assets” providing that they offer “sixty days written notice to the commissioner”. The bill also allows banks to operate as qualified custodians of digital assets in line with regulations stipulated by the U.S. Securities and Exchange Commission (SEC).
Although the political elite across America remain doubtful about the legitimacy of cryptocurrency, there is a growing campaign for the implementation of central bank cryptocurrencies. Christine Lagarde, director of the International Monetary Fund (IMF), threw her weight behind the concept at the Singapore Fintech Festival late last year. Ms Lagarde believes national cryptocurrencies would put a stop to issues such as financial inclusion and privacy, whilst offering consumer protection. A former governor at the US Federal Reserve, Kevin Warsh, also recently spoke out in favor of the concept.
Researchers at the St Louis Fed conducted a feasibility study on national cryptocurrencies last February. Fabian Schar and Aleksander Berentsen determined that central banks could “easily” create their own cryptocurrency for nationals. However, they believed the innate “permissionless” characteristics of cryptocurrency were at odds with a central bank, deeming a national cryptocurrency to operate more like centrally-managed electronic money.
Nonetheless, we are beginning to see local and national governments take cryptocurrencies more seriously. It’s therefore likely that we’ll see a raft of new regulatory developments in the US and elsewhere around the world in 2019.
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