The US state of New York may tax the sales and transfers of crypto and non-fungible tokens (NFTs), under a bill submitted in the state’s Assembly.
Assembly Bill 8966, introduced on Wednesday by Democratic Assemblymember Phil Steck, would add a 0.2% excise tax on “digital asset transactions, including the sale or transfer of digital assets.”
The bill, if passed, would take effect immediately and apply to all sales and transactions, starting Sept. 1.
If enacted, the bill could bring in significant tax revenue for the state, as New York City is the world’s largest financial and fintech hub, home to industries that have embraced crypto by buying up billions worth of tokens or offering crypto-based financial products.
Crypto tax to fund school substance abuse programs
Steck’s bill denotes that the funding from the crypto tax sales would be earmarked to expand a “substance abuse prevention and intervention program to schools in upstate New York.”
The bill clarifies that it would change the state’s tax laws, and the new levy would apply to “digital currencies, digital coins, digital non-fungible tokens or other similar assets.”
There are multiple steps before the bill becomes law. It will need to pass through a committee before being put to a vote before the full Assembly; it would then be sent to the Senate and, if approved, on to the governor, who could pass or veto the bill.
State taxes on crypto widely vary
In the US, the federal and state governments can both levy taxes, which leads to states lowering — or in the case of Texas, completely scrapping — corporate and income taxes in the bid to attract companies looking to minimize their tax bills.
Most states do not have guidance on how their tax authorities should treat crypto. Others, such as California and New York, treat crypto as cash, while states like Washington exempt crypto from taxes, according to Bloomberg Tax.
New York home to crypto bigtimers
New York, more specifically New York City, has long been home to crypto industry heavyweights due to its status as a global finance center.
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Stablecoin issuers Circle Internet Group and Paxos, along with crypto exchange Gemini and analytics firm Chainalysis, are headquartered in the city, while many other crypto firms operate offices there.
New York was the first US state to launch a comprehensive regulatory regime for crypto, in 2015 introducing the BitLicense, a divisive permit that caused many crypto companies to leave the state as it was too burdensome. Others, such as Circle, Paxos and Gemini, embraced the opportunity to be regulated.
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