New York State Proposes Tax on Crypto and NFTs
The state of New York is moving forward with a proposal to tax the sales and transfers of cryptocurrencies and non-fungible tokens (NFTs) through a bill recently introduced in the Assembly.
Assembly Bill 8966, which was introduced on Wednesday by Democratic Assemblymember Phil Steck, aims to implement a 0.2% excise tax on “digital asset transactions, including the sale or transfer of digital assets.”
If this bill is approved, it would take effect immediately and apply to all sales and transactions starting on September 1.
Should it be enacted, the bill is expected to generate significant tax revenue for the state, as New York City stands as the largest financial and fintech hub in the world—industries that have greatly adopted crypto by acquiring billions in tokens or offering crypto-based financial products.
Steck’s bill specifies that the revenue generated from the crypto sales tax should be designated for expanding a “substance abuse prevention and intervention program to schools in upstate New York.”
The legislation clarifies that it will amend the state’s tax laws, and the new tax will apply to “digital currencies, digital coins, digital non-fungible tokens or other similar assets.”
There are several steps that must be completed before the bill can become law. It will first need to pass an Assembly committee, then be voted on by the full Assembly, followed by being sent to the Senate. If it receives approval there, it will ultimately go to the governor, who can either pass or veto the bill.
In the United States, both federal and state governments have the ability to levy taxes, which can prompt states to reduce, or in the case of Texas, entirely eliminate, corporate and income taxes in an effort to attract businesses looking to minimize their tax obligations.
Most states lack clear guidance on how their tax authorities handle crypto, while others, including California and New York, classify crypto as cash. In contrast, states like Washington offer tax exemptions for crypto, as reported by Bloomberg Tax.
New York, especially New York City, has long been a hub for influential players in the crypto industry due to its ranking as a global finance center.
- Stablecoin issuers Circle Internet Group and Paxos
- Crypto exchange Gemini
- Analytics firm Chainalysis
These companies have their headquarters in the city, while many other crypto firms also maintain offices there.
New York was the first state in the U.S. to establish a comprehensive regulatory framework for crypto, launching the BitLicense in 2015—a controversial permit that drove some crypto companies away from the state due to its perceived burdensomeness, while others, such as Circle, Paxos, and Gemini, welcomed the opportunity to be regulated.
