New York Proposes 0.2% Tax on Crypto Transactions

The New York State Assembly member Phil Steck has introduced a bill to impose a 0.2% excise tax on crypto transactions. Once passed, the excise tax will be applied to the transfer and sales of digital assets such as cryptocurrencies and non-fungible tokens (NFTs). Assembly Bill 8966 has the potential to impact New York State’s crypto ecosystem. The bill will amend the state’s tax laws and apply a levy to “digital currencies, digital coins, digital non-fungible tokens, or other similar assets.” If passed, the tax would take effect immediately and apply to all relevant transactions starting September 1.

New York to Impose 0.2% Tax on Crypto

A distinguishing feature of the proposal is its assignment of tax revenue for social programs. Funds collected from the tax would be directed toward expanding substance abuse prevention and intervention initiatives in upstate New York schools. Supporters say that in this way, the state's growing digital asset economy will directly help public welfare programs.

Assembly Bill 8966 has to go through a number of procedures before it can become law. The committee will look at it first, and then the whole Assembly will vote on it. It will go to the state Senate if it gets the go-ahead. The governor will make the final choice. He or she can either sign the bill into law or veto it.

The bill proposal comes at a time when different states in the U.S. have different ways of taxing cryptocurrencies. The federal government collects its own taxes, but states have a lot of freedom to make their own rules. Some states, like Texas, have gotten rid of corporate and income taxes to bring in business. Others, like California and New York, treat crypto like currency when it comes to taxes. On the other hand, Washington State doesn't tax some types of cryptocurrency.

Most states haven't made clear rules about how to tax digital assets yet. This makes it a competitive market where tax policies affect where crypto businesses decide to do business.

Several of the biggest crypto companies are based in New York City, which is also the world's largest financial center. These include Circle Internet Group and Paxos, which produce stablecoins, Gemini, which runs a crypto exchange, and Chainalysis, which analyzes blockchain data. The state has a history of being the first to regulate digital assets. In 2015, it was the first in the country to create a full licensing system for crypto businesses, called the BitLicense. At first, the system made some enterprises leave because it was too hard to follow the rules, while others saw the rules as a sign of legitimacy.

If Steck’s proposal becomes law, New York would not only reinforce its role as a regulatory leader but also set a precedent for leveraging the fast-growing crypto economy to fund public programs.