With the ongoing amendment of the digital assets regulation, the US has demonstrated the likelihood of shutting down the crypto sector. From the last bull run the policymakers enforced unfriendly regulations that forced high-profile crypto firms to exit the US market.
Despite the anti-crypto outlook in the US some of the states leveraged the power of digital assets to boost financial inclusivity in the region.
Analyzing Attractiveness of US States
A study conducted to examine the states in the United States supporting the mainstream adoption of digital assets demonstrated that Florida was a crypto-friendly region.
Compared to the 50 states in the US the CoinLedger report profiled Florida as the “best state” for crypto taxes. The study recognized the unique crypto taxation regime in Florida.
The CoinLedger report ranked each of the 50 states according to the crypto attractiveness. New York state was ranked among the worst states in the US with restrictive measures that undermine the growth of the crypto industry.
According to the January 22 report the CoinLedger team noted that Florida exempted the crypto investor from state income tax. In the research, the CoinLedger team observed that Florida has implemented crypto-friendly regulations that stimulate the growth of the digital sector.
A few months ago the policy makers in Florida allowed businesses and investors to pay taxes using crypto assets. Even though the use of crypto in tax remittance is still under the pilot trials Florida’s taxation approach was ranked as the best for crypto taxes. The study listed Texas and Wyoming as among the top three crypto-friendly states.
Regulatory Approach for Digital Assets in the US
According to the report policy makers in Wyoming and Texas led by Senator Cynthia Lummis have demonstrated their pro-crypto stance. After lengthy amendments to the digital assets regulations, the policymakers allowed financial institutions and banks to offer crypto custodial services.
In the report, Nevada was ranked the fourth crypto-friendly state. Unlike the other states, the policymakers in Nevada removed the ban on blockchain use in late 2017. Afterwards, the Nevada regulators exempted state income tax on digital assets. Slightly below Nevada, the CoinLedger ranked Arizona fifth.
The listing on the CoinLedger was determined by the measures enforced by the US states to support the development of digital assets. In the report, Arizona was ranked among the top five crypto-friendly states after the regulators declared airdrops as tax-free at the state level.
Impact of Changes in Tax Rate on the Business
Also, investors are only required to remit 2.5 % of income generated from crypto activities to respective regulatory agencies in Nevada. After analyzing the different taxation approaches the CoinLedger team noted that New York was the worst state with a 100% income tax rate for digital assets.
Above New York, California was ranked the second worst state for crypto assets. The report indicated that the income tax rate for crypto assets ranges from 1% to 13.3% in California. Other states that were among the bottom ten included Hawaii, Massachusetts and New Jersey.
Besides assessing the taxation regime and the income tax rates in different US states the study examined the suitability of crypto regulations.
Commenting on the taxation regime for digital assets in the US the chief executive of CoinLedger David Kemmerer underlined the need for investors to comprehend local tax rules. He admitted that the state tax rates might expose the crypto investors to losses.