The US region of New York could impose taxes on the sales and transfers of cryptocurrency and non-fungible tokens (NFTs), according to a proposal presented in the state’s Assembly.
Assembly Bill 8966, put forward on Wednesday by Democratic Assemblymember Phil Steck, seeks to introduce a 0.2% excise tax on “digital asset transactions, encompassing the sale or transfer of digital assets.”
If the bill is passed, it would be implemented immediately and would pertain to all sales and transactions, commencing on Sept. 1.
If enacted, the legislation could generate considerable tax revenue for the state, as New York City is recognized as the world’s largest financial and fintech center, housing sectors that have adopted cryptocurrency by accumulating billions in value of tokens or providing crypto-based financial services.
Crypto tax intended to support school substance abuse initiatives
Steck’s proposal indicates that the revenue generated from the crypto tax sales would be allocated to enhance a “substance abuse prevention and intervention program in schools throughout upstate New York.”
The legislation clarifies that it would amend the state’s tax regulations, with the new charge applying to “digital currencies, digital coins, digital non-fungible tokens, or other analogous assets.”
There are several phases before the proposal can become law. It must first pass through a committee before being voted on by the full Assembly; subsequently, it will be forwarded to the Senate and, if approved, sent to the governor, who has the power to approve or reject the bill.
State taxes on crypto greatly differ
In the US, both federal and state authorities have the ability to impose taxes, leading to some states reducing — or, in Texas’s case, completely eliminating — corporate and income taxes to attract businesses aiming to reduce their tax obligations.
Most states lack guidance on how their tax bodies should address cryptocurrency. Some, like California and New York, treat crypto as cash, while states such as Washington exempt cryptocurrency from taxation, according to Bloomberg Tax.
New York hosts crypto giants
New York, particularly New York City, has historically been home to significant players in the crypto sector due to its prominence as a global financial hub.
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Stablecoin issuers Circle Internet Group and Paxos, along with the crypto exchange Gemini and analytics firm Chainalysis, are based in the city, while numerous other crypto enterprises maintain offices there.
New York was the pioneering US state to establish a thorough regulatory framework for cryptocurrency, debuting the BitLicense in 2015, a controversial permit that drove many crypto firms away due to its heavy demands. Others, such as Circle, Paxos, and Gemini, welcomed the chance to be regulated.
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