North Carolina lawmakers have introduced the Digital Asset Freedom Act. The proposed bill seeks to amend the state’s tax code to allow citizens to use digital assets for tax payments. The bill, House Bill 920, was filed by State Representative Neal Jackson and two co-sponsors on April 10.
Following the bill’s proposal, it will be reviewed by the North Carolina General Assembly’s finance committee, which will pass through debate and potential amendments. If passed, the legislation would make North Carolina one of the few states to allow digital assets to be used in tax payments.
North Carolina Considers Limited Crypto Tax Payments
According to the terms of the North Carolina draft, the use of crypto assets in tax payments and other economic transactions is subject to certain restrictions as not all crypto assets are eligible under the proposed bill. Specifically, for any digital asset to be considered eligible, it must comply with a comprehensive set of requirements stipulated in the draft.
The bill stated, “The General Assembly finds that digital assets, when properly regulated and aligned with principles of decentralization, security, and resilience, can be a valid and stable medium for economic exchange.”
Explicitly, the requirements stipulated that for any digital asset to qualify, it must have a market capitalization of at least $750 billion, and a daily trading volume exceeding $10 billion. The asset must also have existed for a decade or more, demonstrate resistance to censorship, and use a proof-of-work consensus mechanism. Additionally, the asset must be decentralized, have a network uptime of 99.98% or higher, and have a capped maximum supply.
North Carolina Could Use Bitcoin to Pay Taxes
Although Bitcoin is not specifically mentioned in the bill, it satisfies many of the requirements listed, positioning it as a possible asset for North Carolina citizens to use for tax payments if the bill becomes law.
For instance, with a market cap of over $1 trillion, Bitcoin exceeds the $750 billion mark. The asset has also recorded daily trading volume exceeding $10 billion severally, is decentralized, and has a limited maximum supply of $21 million.
If the bill is passed, North Carolina will be following in the footsteps of El Salvador, which previously accepted cryptocurrency for tax payments. Although the country has discontinued the practice, it is still bullish on Bitcoin acquisition.
