Tax season has been a rude awakening for many cryptocurrency investors, as the IRS has pushed back on attempts to avoid paying taxes on digital currency investments and profits. Outside of the U.S., many countries are seeing similar crackdowns from authorities as well, with local and national governments alike enacting measures that could limit the use of digital currencies, if not outright ban them. As this is happening, though, the state of Wyoming seems to be moving in the opposite direction. A report from bitcoin.com details a number of new measures approved by the state legislature that could have a positive impact on cryptocurrency business.
Cryptocurrencies Exempted From Property Taxation
One of the most significant developments in Wyoming has been Bill 111, a measure that exempts digital currencies from property taxation statewide. The law defines "virtual currencies" as any form of digital representation of value that is used as a medium of exchange, a unit of account, or a store of value and that is also not recognized as legal tender by the U.S. government. Digital currency investors in Wyoming are likely to view the passage of this bill with overwhelming positivity, particularly in light of its stark contrast with taxation efforts in other parts of the country.
Over the same period, Wyoming legislators also added four other bills that collectively could help to facilitate blockchain and cryptocurrency business ventures in the state. Among other things, these bills exempted utility tokens from securities laws and also made digital currency exchanges exempt from the Money Transmitter Act.
Bid for Business?
Wyoming state Rep. Tyler Lindholm spoke out about the passage of these bills, citing Wyoming as a promising destination for cryptocurrency businesses. Lindholm explained in an interview on CNBC that bitcoin miners would no longer face a property, income or corporate tax. There are only nine states in the country that have no income tax.
Further enticement for digital currency business could be found in the state's ample electricity: Wyoming already exports most of its production capacity. The state produces nearly half of all coal mined throughout the country and it also has the largest uranium mining operations nationwide, as well. All told, this may make for an attractive destination for new digital currency startups.
Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.