The state of New York is poised to potentially implement a 0.2% excise tax on the sale and transfer of cryptocurrencies and non-fungible tokens (NFTs) through a new bill that has been introduced in the state Assembly. Assembly Bill 8966, which was submitted on Wednesday by Democratic Assemblymember Phil Steck, aims to modify the state’s tax regulations to encompass “digital asset transactions, including the sale or transfer of digital assets.”
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Should this bill be enacted, it would take effect immediately, applying to all eligible transactions from September 1. The proposed tax would encompass a wide array of assets, including digital currencies, coins, NFTs, and other comparable instruments. The revenue generated from this tax would be allocated for the enhancement of “substance abuse prevention and intervention programs” in schools throughout upstate New York.
The legislative process still has multiple stages to navigate before the bill can be enacted into law. It must first undergo committee review before it can proceed to a full Assembly vote, after which it would be forwarded to the Senate. If it receives approval there, it would then be sent to the governor for final approval or veto.
State and federal approaches to cryptocurrency taxation in the U.S.
New York’s suggested initiative has the potential to produce considerable tax income, considering the state’s status as a worldwide financial and fintech center. New York City is home to key participants in the cryptocurrency sector, such as stablecoin providers Circle and Paxos, the cryptocurrency exchange Gemini, and the blockchain analytics company Chainalysis. The city’s well-established financial framework has drawn in billions of dollars in digital asset investments and has stimulated the expansion of financial products related to cryptocurrency.\
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In the United States, both federal and state authorities have the ability to impose taxes, resulting in a variety of methods across the country. For instance, some states, such as Texas, have eliminated certain taxes to draw in businesses, whereas others, including California and New York, classify cryptocurrency as equivalent to cash for taxation. At the same time, states like Washington have opted to completely exempt digital assets from particular taxes.New York became the inaugural U.S. state to establish a thorough regulatory framework for cryptocurrency with the introduction of the BitLicense in 2015.
Although this framework prompted certain companies to exit the state because of compliance expenses, others welcomed the regulation as a means to enhance their market credibility.