Integral to the fortunes of bitcoin, other digital currencies, and crypto-correlated stocks is expansion of the usage case for cryptocurrencies. The viable ones, at least.
Looked at differently, the more legitimate avenues where bitcoin can gain a payment foothold, the better. Whether it’s something as mundane as buying groceries with the digital currency or larger purchases, such as cars or houses, the broader the acceptance of bitcoin as a form of payment, the better for digital assets and exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO).
How about using bitcoin to pay taxes? The idea is in its early stages, but Colorado is stepping up to the plate. That state’s Department of Revenue recently announced it is allowing residents to pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax, and excise fuel tax with cryptocurrency.
“Only PayPal Personal accounts can pay using cryptocurrency. PayPal Business accounts cannot pay using cryptocurrency at this time,” according to the Colorado Department of Revenue. “You must have the entire value of your invoice in a single cryptocurrency in your PayPal Cryptocurrencies Hub.”
In plain English, Colorado residents and business owners looking to pay taxes in crypto must have a PayPal account. As a result, it’s reasonable to assume that the only cryptocurrencies the state will accept as forms of tax payment are bitcoin, ethererum, litecoin, and bitcoin cash — the only digital currencies available for purchase on PayPal.
There are benefits for PayPal, which accounts for almost 1% of the SATO roster, in the Colorado scenario. Tax payers opting to use crypto must pay a flat $1 and 1.83% of the transaction amount — some of which is likely to flow to PayPal.
“Fees such as PayPal purchase fees, when buying cryptocurrency through PayPal, or miner/gas fees, when transferring cryptocurrency from an external wallet to your PayPal Cryptocurrencies Hub, may apply,” added the Department of Revenue.
While Colorado didn’t comment to this effect, it’s possible that as the PayPal/crypto offering gains popularity, the state could broaden the offering to include Block (NYSE:SQ). Block is a direct rival to PayPal and allows users to buy and store bitcoin on the platform. That stock accounts for 3.12% of the SATO roster.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.