New Legislative Proposal in New York State
New York State is moving forward with a new legislative proposal aimed at imposing taxes on transactions involving cryptocurrencies and non-fungible tokens (NFTs), a significant measure introduced in the Assembly. On Wednesday, Assemblymember Phil Steck, a Democrat, presented Assembly Bill 8966, which seeks to introduce a 0.2% excise tax on what it calls “digital asset transactions“, encompassing the sale and transfer of various digital assets.
Implementation and Revenue Generation
Should the bill gain approval, it would be implemented immediately, applying to all transactions commencing on September 1 of this year. This move has the potential to generate substantial tax revenue given New York City’s prominent position as a leading hub for finance and fintech, where firms have heavily invested in cryptocurrencies and developed numerous crypto-related financial services.
Allocation of Tax Revenue
The proposed legislation specifies that the revenue generated from the newly established tax would be directed towards enhancing a “substance abuse prevention and intervention program” in schools situated in upstate New York. It is important to note that this tax measure aims to modify the state’s existing tax framework to include not only digital currencies and coins but also digital non-fungible tokens and other comparable assets.
Legislative Process
The path to enactment for this bill includes several crucial stages, requiring approval from an Assembly committee before the full Assembly votes on it. If it proceeds successfully through these stages, it would then be sent to the Senate, and, upon further approval, to the governor for final decision, who holds the authority to either sign it into law or reject it.
State Variations in Cryptocurrency Taxation
Moreover, the treatment of cryptocurrency taxation varies significantly across different states in the US. While some states have opted to eliminate corporate and income taxes to attract businesses, others remain ambivalent regarding the taxation of crypto assets. In California and New York, cryptocurrencies are classified similarly to cash, whereas states like Washington offer tax exemptions on crypto transactions, according to information from Bloomberg Tax.
New York’s Crypto Landscape
New York has historically been a stronghold for major crypto enterprises, with many leading companies including Circle Internet Group, Paxos, and the cryptocurrency exchange Gemini, having their headquarters in the city. New York also pioneered a comprehensive regulatory framework for cryptocurrency with the introduction of the BitLicense in 2015, a regulation that has drawn mixed reactions; while it encouraged compliance among some firms, it also prompted others to relocate due to its perceived restrictive nature.
