Governor Katie Hobbs of Arizona has vetoed a bill that would have restricted local authorities from imposing taxes on blockchain node operators, citing concerns over the potential lost revenue for cities and towns. Hobbs issued the veto on April 12, rejecting the state bill 1236, which aimed to revise statutory sections relating to blockchain technology, with the objective of reducing or eliminating regulation and taxation of node operators at the state level.
The legislation stated that cities or towns could not levy taxes or fees on individuals or entities running blockchain nodes in their residences. According to the Senate-engrossed version of the bill, a tax or fee on a person or entity running a node on blockchain technology in a residence was a matter of statewide concern and not subject to further regulation by a city or town. The bill also applied the same restrictions to counties as it did to cities and towns. Following the approval of both the Arizona Senate and House, the bill was sent to Hobbs’ desk, where she vetoed it on her 100th day in office.
While some Arizona lawmakers have introduced measures aimed at creating a pro-crypto regulatory environment for companies and individuals alike, Governor Hobbs’ veto is a clear indication that the state must consider the potential loss of revenue before passing legislation that may reduce tax income for cities and towns.
State Senator Wendy Rogers has proposed that Arizona’s government adopts Bitcoin as legal tender, and other lawmakers have supported a resolution making crypto a tax-exempt property under the state’s constitution. However, the outcome of these proposals remains unclear, as the state needs to carefully consider the impact of adopting crypto as legal tender and tax-exempt property.
While some states have embraced cryptocurrency in recent months, others have been hesitant to do so. Colorado governor Jared Polis has expressed his optimism about the state accepting tax payments in cryptocurrency by the summer, while other states have taken a more conservative approach.
As crypto continues to gain mainstream recognition and adoption, there will undoubtedly be increasing pressure on states to regulate and tax its use. The debate over whether blockchain nodes should be taxed or regulated by local authorities is likely to continue, with supporters of the technology arguing that they provide a vital service in maintaining the Bitcoin network, while opponents point to the potential loss of revenue for local governments.
It remains to be seen what steps Arizona will take in the future to create a more favorable regulatory environment for the blockchain industry. As the state’s lawmakers contemplate new proposals, they must also consider the potential impact on local authorities and weigh the benefits against the potential lost revenue. Ultimately, the outcome is likely to have implications on the broader debate surrounding the regulation of blockchain technology and its role in society.
