Make Kitco Your Homepage

Will Arizona be the first U.S. state to accept bitcoin as legal tender?

Kitco News

(Kitco News) An Arizona state senator proposed a bill that would make Bitcoin legal tender. In an unlikely event that it will pass, Bitcoin could be used as cash to pay for purchases, bills and taxes.

Bill 1341 was introduced by the Republican State Senator Wendy Rogers of Arizona. The measure aims to authorize Bitcoin as a means of payment on "any medium of exchange that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues."

The bill states: "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 21 mathematical problems and that operates independently of a central bank."

It is unlikely that this bill will pass or be effective since the U.S. Constitution prohibits states from creating their own currencies. But it will trigger a debate on the topic. 

In order to pass, the proposal needs to be voted on by the Arizona state Senate and House before being passed on to Gov. Doug Ducey to be signed into law.

"Arizona could certainly pass a law like this and the state government could choose to accept Bitcoin as payment for Arizona taxes, but this would not change the legal treatment of Bitcoin as property from a federal tax perspective," Blockworks quoted Preston Byrne, partner at law firm Ander Kill, as saying.

Biggest gold price losses to hit market in mid-2022, here's why

Back in September, Rogers said that she would be working on making Arizona more "crypto-friendly."

At the end of December, she was appointed to the Blockchain and Cryptocurrency Study Committee with the goal of submitting a report at the end of this year. 

Last year, El Salvador was the first, and so far the only country, to adopt Bitcoin as legal tender. But crypto enthusiasts are keeping a close eye on more countries following El Salvador's example in 2022.

"We're seeing game theory take place. The countries that don't accept Bitcoin could see its economic value transfer out to another country that accepts Bitcoin," GlobalBlock analyst Marcus Sotiriou told Kitco News. "I wouldn't be surprised to see another South American country adopt Bitcoin this year. Brazil's Rio de Janeiro allocated 1% of its reserves to Bitcoin. It could be a very tactical move to accept Bitcoin and stay ahead in this technological revolution."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.