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Arizona governor vetoes bill targeting taxes on blockchain node hosts

The bill aimed to have only state authorities impose regulations and taxes on individuals and businesses running blockchain nodes, as opposed to those at the city and county level.

Katie Hobbs, the governor of the American state of Arizona, has vetoed legislation that would have largely stopped local authorities from imposing taxes on individuals and businesses running blockchain nodes.

In an April 12 decision, Governor Hobbs issued a veto to Arizona Bill 1236, first introduced in January. The legislation aimed to revise sections of statutes pertaining to blockchain technology, largely reducing or eliminating regulation and taxation of node operators at the state level.

“A city or town may not impose a tax or fee on any person or entity for running a node on blockchain technology in a residence,” said the Senate version of the bill. “The imposition of a tax or fee on a person or entity running a node on blockchain technology in a residence is of statewide concern and not subject to further regulation by a city or town.”

Under the bill, the same restrictions for cities and towns on node operators would have also applied to counties. Following approval in the Arizona Senate and House, lawmakers sent the bill to Hobbs’ desk, where she vetoed the legislation on her 100th day in office.

It was a great day celebrating the first 100 days of my administration with folks from across Arizona.

There’s so much more to do, but I’m excited about the foundation we’ve laid and where we’re going next.

Thank you, Arizona. #Hobbs100 pic.twitter.com/piL6GEXb9m

— Governor Katie Hobbs (@GovernorHobbs) April 13, 2023

Some Arizona lawmakers have introduced legislation aimed at making the U.S. state a pro-crypto regulatory environment for both companies and individuals. State Senator Wendy Rogers proposed Arizona’s government make Bitcoin (BTC) acceptable as legal tender and joined with other lawmakers in a resolution having crypto be a tax-exempt property under the state’s constitution.

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Even though this winter continues to stress test the case for Bitcoin advocation, some lawmakers strive to put their names on the crypto hot list.

Even though this winter continues to stress test the case for Bitcoin (BTC) advocation, some lawmakers strive to put their names on the crypto hot list among the likes of United States Senators Cynthia Lummis and Pat Toomey. State Senator Wendy Rogers, 68, introduced two bold bills in the Arizona legislature. One focuses on making BTC legal tender in the U.S. state. If passed into law, BTC will have the same status as the U.S. dollar, becoming an accepted medium of exchange for debt payment, public charges, taxes and dues in the state. The bill is not Rogers’ first attempt at making BTC legal tender, with a similar bill defeated in 2022.

Rogers also participated in introducing a bill that seeks to make crypto a tax-exempt property in the state. Alongside Senators Sonny Borrelli and Justine Wadsack, Rogers proposed to let Arizona residents decide on amending the state’s constitution regarding property taxes. Should the measure pass the legislature, voters could choose to make digital currencies — specifically tokens that are not “a representation of the United States dollar or a foreign currency” — tax-exempt.

Though not so bold, another important bill was introduced to the New York State Assembly. The bill would allow state agencies to accept cryptocurrency as a form of payment for fines, civil penalties, taxes, fees and other payments charged by the state. The bill does not obligate state agencies to accept crypto as payment, but it does clarify that state agencies can legally agree to accept such payments and that the courts should enforce these agreements.

The fate of crypto legislation will be decided by Panama’s Supreme Court

Panamanian President Laurentino Cortizo sent the crypto legislation passed last year to the high court for review, claiming the so-called “crypto bill” is unenforceable and violates the constitution’s core principle. President Cortizo also argued that the bill had been approved through an inadequate procedure following his partial veto of the legislation in June 2022. At the time, the president argued that the bill needed more work to comply with new regulations recommended by the Financial Action Task Force to improve fiscal transparency and prevent money laundering.

South Korea to deploy cryptocurrency tracking system in 2023

South Korea’s Ministry of Justice has announced plans to introduce a crypto-tracking system to counter money laundering initiatives and recover funds linked to criminal activities. The “Virtual Currency Tracking System” will be used to monitor transaction history, extract information related to transactions and check the source of funds before and after the remittance. While the system is slated to be deployed in the first half of 2023, the South Korean ministry shared plans to develop an independent tracking and analysis system in the second half of the year.

US securities regulator probes Wall Street over crypto custody

The United States Securities and Exchange Commission (SEC) has been probing traditional Wall Street investment advisers that may offer digital asset custody to its clients without the proper qualifications. Much of the SEC’s efforts in this inquiry examine whether registered investment advisers have met the rules and regulations around the custody of client crypto assets. By law, investment advisory firms must be “qualified” to offer custody services to clients and comply with custodial safeguards set out in the Investment Advisers Act of 1940.

Arizona lawmakers seek to make crypto a tax-exempt property

Should the bill pass the legislature, Arizona voters will decide whether virtual currency is tax-exempt as part of a November 2024 ballot measure.

Lawmakers in the Arizona State Senate are considering a bill aimed at having voters decide whether virtual currency should be exempt from property taxation.

In legislation introduced in the first session of the Arizona State Senate in 2023, Senators Wendy Rogers, Sonny Borrelli, and Justine Wadsack proposed having Arizona residents decide on amending the state’s constitution in regard to property taxes. Should the measure pass the legislature, voters could choose in November 2024 to make virtual currency — specifically tokens that are not “a representation of the United States dollar or a foreign currency” — tax-exempt.

Under Arizona’s constitution, all federal, state, county and municipal property are tax exempt, as are public debts, many household goods, and certain “stocks of raw or finished materials, unassembled parts, works in process or finished products”. Data from the Arizona Secretary of State indicates that there were more than 4 million registered voters in the November 2022 general election, with the state leaning slightly Republican.

The bill, SCR 1007, went through two readings as part of the state Senate’s calendar, on Jan. 19 and Jan. 23. Lawmakers in previous sessions have attempted to move forward on legislation related to crypto and taxes, such as a 2018 bill allowing residents to submit tax payments in crypto, before then-Governor Doug Ducey vetoed the bill. Rogers also introduced a bill similar to SCR 1007 in the second Senate session of 2022.

However, the proposed legislation would face a different political climate than that of 2018 or even 2022, with Rogers, Borrelli and Wadsack — all Republicans — having either denied or questioned the fair and legitimate election of some state and federal lawmakers. Democrat Katie Hobbs narrowly defeated Republican Kari Lake to become the governor of Arizona in the 2022 midterm elections.

At the federal level, sales or purchases of cryptocurrency are generally subject to capital gains taxes in the United States. Lawmakers in different U.S. states have proposed various policies related to crypto and taxes, including Colorado Governor Jared Polis allowing residents to pay taxes in crypto and Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming offering 0% capital tax gains to potential investors.