Crypto Roads, Take Me Home: Three Policies for a Cryptocurrency Friendly West Virginia
The Future of Cryptocurrency and West Virginia
Whether it is Bitcoin, Ethereum, or any of the other countless blockchain tokens available today, one thing is clear: cryptocurrency is here to stay. However, many states have not prepared for this reality. Thus they will not reap the benefits of a thriving cryptoeconomy. Fourteen years after the invention of Bitcoin and the blockchain, the legal environment in many jurisdictions remains ambiguous. What sort of property are cryptocurrencies? Are all cryptocurrencies the same? When used as currency, are cryptocurrency exchanges taxable? The list goes on. And as cryptocurrency becomes more and more mainstream, it is in West Virginia’s best interest to clear up any confusion. This will enable the 21st century’s digital gold to flow freely down our country roads. Here are three policies the Mountain State can enact to become more cryptocurrency friendly.
Exempting Cryptocurrencies from Capital Gains Taxes
Taxing authorities broadly see cryptocurrencies as assets. This means that realized gains from the sale of cryptocurrency are taxable under whatever provisions deal with capital gains. West Virginia treats capital gains as another stream of income, so sales of cryptocurrency could be taxed at rates up to 6.5%. West Virginia can become a haven for individuals and companies who deal in cryptocurrency by no longer considering its appreciation as income. This would make West Virginia a destination for cryptocurrency holding and mining.
Clarifying Where Cryptocurrencies and Securities Diverge
Another way West Virginia can become more friendly to cryptocurrencies is by clarifying currency versus investment. Many cryptocurrencies are sold as speculative investment vehicles. There is no way around it. But, not all are. Those that are not sold as financial investments should not be treated as though they were by West Virginia securities laws. The State of Wyoming already has a framework in place that helps distinguish investment cryptocurrencies from utility tokens that West Virginia could adopt.
Investing in Cryptocurrency Mining
Finally, mining is inseparable from West Virginia’s cultural fabric. While cryptomining looks very different from our traditional coal mining, West Virginia should examine ways to make our state attractive to cryptocurrency mining companies. From existing ideas, like mining equipment tax breaks and tax abatements, to more novel strategies of reclaiming high powered mining facilities or naturally cool coal mines, the hills of West Virginia could become a destination for crypto mining activities and the jobs that come with them.
Jacob McCoy is a Contributor for the Cardinal’s Nest Blog.
You can read more by Jacob here.