New York Assemblymember Introduces Legislation to Tax Cryptocurrency Transactions
New York Assemblymember Phil Steck recently introduced a groundbreaking piece of legislation that aims to generate significant tax revenues from cryptocurrency transactions across the state. The proposed bill, known as A0966, would impose a 0.2% excise tax on all crypto transactions in the Empire State, with the proceeds earmarked to combat substance abuse in upstate New York.
According to Steck, the tax is expected to generate approximately $158 million in annual revenue, with the funds specifically allocated to expand substance abuse prevention and intervention programs in schools throughout the region. This move comes in response to the ongoing opioid epidemic that has severely impacted communities in upstate New York for years.
Supporting Education and Combating Substance Abuse
As the chair of New York’s Standing Committee on Alcoholism and Drug Abuse, Steck has a keen understanding of the challenges facing the state in addressing substance abuse issues. By leveraging revenue from crypto transactions, the proposed legislation aims to provide much-needed support to schools and communities struggling with addiction.
Furthermore, the bill aligns with efforts in other states, such as Wyoming, where crypto-related initiatives are being used to bolster education funding. In Wyoming, revenue generated from a forthcoming stablecoin will be directed towards the state’s education fund, demonstrating the diverse ways in which cryptocurrencies can contribute to public welfare.
Tax Implications for Cryptocurrencies in New York
Currently, cryptocurrencies like Bitcoin are treated as cash equivalents for tax purposes in New York, along with several other states. However, Steck’s bill extends the scope of taxation to include various digital assets, such as NFTs, mined assets, and stablecoins.
The New York Department of Financial Services, which oversees crypto firms through its BitLicense program, has not provided specific data on the volume of crypto transactions in the state. To estimate the potential revenue from the tax, Steck used data from Chainalysis on the dollar value of crypto transactions in the U.S. and adjusted it based on New York’s share of GDP.
Addressing Fraud and Environmental Concerns
In his memo, Steck also highlights the industry’s vulnerability to fraud and scams, citing past incidents involving firms like Gemini. The assemblymember notes the environmental impact of cryptocurrencies, particularly the energy consumption associated with mining activities.
Notably, New York City’s status as a financial hub and a growing center for crypto-native companies adds to the potential impact of the proposed tax legislation. With firms like Circle, Gemini, and Galaxy Digital operating in the state, the bill could have far-reaching implications for the crypto industry.
Overall, Steck’s legislation represents a significant step towards harnessing the economic potential of cryptocurrencies to address pressing social issues and fund essential programs in New York. As the debate on crypto regulation continues, the outcome of this bill could set a precedent for other states grappling with similar challenges in the digital asset space.