The dominoes are falling, California to consider Bitcoin as legal tender
Efforts are afoot to make Bitcoin legal tender in California in response to currency debasement.
— Ian C. Calderon (@IanCalderon) February 20, 2022
The webpage in question talks about taking affirmative action against monetary debasement, even taking the opportunity to have a pop at the Fed. It states Bitcoin’s current treatment (similar to property in the U.S, therefore subject to capital gains tax) impedes its use as a medium of exchange.
“Now more than ever, it is important for Americans to have money that can be protected from inflation created through monetary debasement. This debasement is an invisible tax on Americans from an unelected board of bankers. We do not accept taxation without representation.”
Advocates say Bitcoin’s fixed supply is the answer to monetary debasement. With surging inflation, now is the time to make it legal tender.
States cannot make Bitcoin legal tender, can they?
Since El Salvador made Bitcoin legal tender in September 2021, speculation on who is next has run rampant.
While various South American countries, including Argentina, Panama, and Paraguay, make the list of potentials, few could have imagined a state in the United States making such a move.
This is because the U.S Constitution, under ArtI.S10.C184.108.40.206, forbids individual states from designating anything other than gold and silver as their own legal tender.
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
However, a bill introduced in Arizona by Senator Wendy Rogers seeks to amend the Constitution by adding Bitcoin to the list of acceptable legal tenders in the state.
The bill still requires passing through the State Senate and House before signing into law. Whether that happens or not is anyone’s guess.
Then again, rifts between state and federal policy are not unheard of. For example, an executive order from Arizona State Governor Doug Ducey, signed in December 2021, outlawed any entity from imposing vaccine mandates.
More states to follow?
Pro-crypto legislation is one thing, but Bitcoin as legal tender is the ultimate nod of approval.
Many U.S states already have pro-crypto legislation written into law. Most notable is Texas, under House Bill 4474, which came into effect from January 2021. It recognizes cryptocurrencies as part of the state’s Uniform Commercial Code. In other words, crypto holders have “the power to derive substantially all of the benefit from the virtual currency” from a commercial aspect.
But neither state has an official bill submitted to their respective state legislatures calling for Bitcoin as legal tender.
Nonetheless, with Arizona and California taking things to this next level, should we expect Texas, Wyoming, and others to make the push as well?