US State proposes the adoption of bitcoin as legal tender, as the price hits over $40,000

Introduction

As the global crypto market cap hits $2.06T today, 8th February 2022, with a 4.85% increase over the last 24 hours, bitcoin’s price has hit $44,777.94, with a 41.50% dominance, and 0.20% increase over the last day. As at February 3, 2022, the US crypto market cap was $1,785.79B, according to Statistica.

In late January 2022, the Senate of the State of Arizona—the Fifty-fifth Legislature during its Second Regular Session in 2022—proposed “AN ACT AMENDING TITLE 1, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 9; RELATING TO LEGAL TENDER.” It was introduced by Senator Wendy Rogers. According to Rogers, “[p]eople should be able to buy Dogecoin, Shiba Inu because it’s a matter of ‘freedom'”.

The Bill provides as follows:

“Section 1. Title 1, Arizona Revised Statutes, is amended by adding chapter 9, to read:

“Legal tender; definitions

A. LEGAL TENDER IN THIS STATE CONSISTS OF ALL OF THE FOLLOWING:

4. BITCOIN.

B. FOR THE PURPOSES OF THIS SECTION: 

  1. “BITCOIN” MEANS THE DECENTRALIZED, PEER-TO-PEER DIGITAL CURRENCY IN WHICH A RECORD OF TRANSACTIONS IS MAINTAINED ON THE BITCOIN BLOCKCHAIN AND NEW UNITS OF CURRENCY ARE GENERATED BY THE COMPUTATIONAL SOLUTION OF MATHEMATICAL PROBLEMS AND THAT OPERATES INDEPENDENTLY OF A CENTRAL BANK. 
  2. “SPECIE” MEANS COINS HAVING PRECIOUS METAL CONTENT.”

In another news, State of Wyoming proposed “A BILL for AN ACT relating to sales and use taxes; allowing for the payment of state and local sales and use taxes in virtual currency; allowing for the payment of state and local sales and use taxes and filing of state and local sales and use tax returns through the operation of a smart contract as specified; requiring the state treasurer’s office to accept virtual currency donations to state funds as specified; requiring rulemaking; and providing for an effective date”. This would only apply to sales and use taxes, but is not limited to a specific crypto asset.

According to a report about the development by Next Advisor, “[t]he new proposals demonstrate further signs that cryptocurrency is pushing toward more mainstream acceptance.”

Also recently in the US, Bloomberg reported that the White House is planning to release an initial government-wide strategy for crypto and other digital assets, and will require federal agencies to assess their risks and opportunities. Bloomberg hinted that “senior administration officials are holding several meetings and drafting an executive order that will be presented to President Joe Biden in the coming weeks.”

The proposed Bill by the State of Arizona, if passed, will make Arizona the first in the US to adopt Bitcoin as legal tender. However the outcome may be, Arizona appears to be setting a precedence for other states to follow. The first and only place that Bitcoin—and by extension cryptocurrency as a whole—has been adopted as legal tender is El Salvador, where the announcement was made in September 2021. Crypto adoption and regulation remain top among the concerns of many countries around the world today.