According to RewardExpert, 80% of adults in the United States have heard of cryptocurrencies, like Bitcoin, while only 10% have actually invested in it. This percentage is thought to be minimal, as there is a lack of education around cryptocurrency in general. In part, due to a lack of education, 50% of people surveyed commented that they do not trust cryptocurrency. Below is a graphic displaying these statistics acquired from the survey conducted:
As cryptocurrency education does increase, however, the United States, as well as individual states, are having to make decisions on how to address regulating it. Federal regulations continue to change with regards to cryptocurrencies, like Bitcoin. At the state level, regulation has been contradictory. Some states have welcomed the opportunity to pass laws encouraging cryptocurrency and altcoin use, while others have been more hesitant to address digital currency.
Below is information on states with the greatest amount of interest in cryptocurrency, states with the most cryptocurrency usage (based on Bitcoin ATMs per capita,), the top already-established crypto-friendly states, and states on the rise to becoming crypto-friendly.
Crypto State Snapshot
Many states have already passed crypto-friendly laws in an effort to prove to be an indisputable crypto hub leader in the United States. Such states including California, Colorado, Ohio, Texas, and Wyoming.
California: In 2014, California became one of the first states to bring forth a form of crypto regulation. The California governor signed a bill that stated that “various forms of alternative currency such as digital currency” are legal in transmitting payments and buying goods. Even though pro-crypto regulation was signed in 2014, since then, the state has not been at the forefront of passing crypto-friendly legislation. This is not necessarily a bad thing, as many companies and individuals view it as an opportunity. Some of the largest United States-based crypto companies, including Kraken and Coinbase, have established its headquarters there.
Colorado: Colorado has not been afraid to pass contradictory legislation in the past; it was, after all, the first state to legalize marijuana. In 2018, Senate Bill 086 was signed and enacted, which “required the Department of States, the Governor’s Office of Information Technology, and the Department of Regulatory Agencies to consider using blockchain to protect confidential state records from theft and manipulation.” Many officials have realized the potential of blockchain technology and cryptocurrency to enhance and support other aspects of the state. In Colorado’s 2018 gubernatorial election, candidates disclosed their support for cryptocurrency and the passing of pro-crypto laws. In March of 2019, The Colorado Digital Token Act was signed by the governor of the state, which was a bill that attempted to “exempt cryptocurrencies from some securities regulations” and “help Colorado’s state agencies regulate the Initial Coin Offerings market.” In May of 2019, the governor of Colorado signed a proposition to assemble a group of advisors to study and analyze the application of blockchain in a variety of areas, including data verification, certification of organic products, inventory tracking and management, and controlling in-field conditions. This study would allow for the state’s agriculture industry to be managed via the blockchain.
Ohio: In August of 2018, Ohio lawmakers legally recognized blockchain data and its supporting technology for the benefit of the state. The state proposed using blockchain technology for marriage licenses and birth certificates. In November of 2018, the state enacted a law that allowed taxes to be paid in crypto. By registering on OhioCrypto.com, companies could then pay sales taxes and employees could withhold taxes using Bitcoin. For instance, pro-crypto company Overstock.com announced that it had plans to file its commercial activity taxes in Ohio for the benefits the state offered. The next area Ohio is looking to apply favorable crypto and blockchain legislation to is the real estate market. In 2019, the County Auditor’s Association of Ohio formed a team to study the ways in which blockchain technology could “more effectively” transfer state real estate deeds via the blockchain.
Texas: Texas was the first state to issue and publish memorandums, affirming that no money transmitter license was necessary to sell Bitcoin or altcoins in the state. Additionally, Texas doesn’t require Texas-based companies to carry a money transmitter’s license when conducting transactions and exchanges for in-state customers. Texas does not consider Bitcoin and other digital currency to be legal money, but does consider it to be a taxable commodity. Texas is not considered a very crypto-friendly state compared to the other states listed; in fact, Texas almost passed a bill that would have banned the use of all cryptocurrencies between unidentified parties. Though the state has a conflicting standpoint on cryptocurrency, the state is still one of the most popular hubs in the United States for crypto mining, as mining here is more cost-efficient.
Wyoming: In 2018, Wyoming’s House of Representatives passed a bill that “defined utility tokens.” Cryptocurrency and blockchain advocate Caitlin Long, co-founder of the Wyoming Blockchain Coalition, was the lobbyist that helped drive the state to become a federal crypto hub. Ms. Long comments that, “the state of Wyoming is the first elected body in the world to define a utility token as a new type of asset class different from a security or commodity.” Additionally, seven other pro-crypto bills were passed that acknowledged digital currency as a legal form of capital. According to Cointelegraph, these bills prompted the state to authorize banks to “hold digital assets in custody, creating a regulatory Fintech sandbox aimed at diminishing industry hurdles for blockchain startups, and helping corporations to tokenize their shares.”
The Rise of Crypto Hub Leaders
Although several states have already passed crypto- friendly regulation, many are trying to catch up or get ahead of others in an effort to become a crypto hub leader. Some of these states include California, Colorado, Kentucky Nevada, New Hampshire, New Mexico, Texas, and cities like Miami, New York City, and Atlanta.
California: California is the digital currency capital of the United States and currently leads in the most Bitcoin-related jobs in the country. California recently enacted a bill regulating the crypto and blockchain industry, but not in a restrictive way. This bill will help to protect the state’s residents from “pandemic-inspired scams” and deceptive or abusive practices by unlicensed financial services or products, relating to crypto and blockchain in particular. The state’s legislation is pro-crypto and blockchain, and now with protective security regulation in place, the state and its crypto ecosystem has the potential to thrive and further become a hub.
Colorado: The rocky mountain state has been progressive since the start; it was the first state to legalize marijuana and support a regulated and taxed marijuana economy. Additionally, the state has backed the adoption of digital currency by passing pro-crypto legislation. Colorado has struggled in the past to lure traditional banking firms to the state, but it is hopeful that it can establish itself as a breeding ground and safe haven site for blockchain and cryptocurrency-based companies. In the past, Colorado has taken regulatory steps to provide legislative clarity and crypto-use cases to better define its pro-crypto ecosystem. The state is looking to continue developing its pro-crypto and blockchain ecosystem with legislation and incentives to make itself a crypto hub and attractive environment for firms. Colorado is looking to make it easier for entrepreneurs to launch their crypto and/or blockchain-based businesses in the state in an effort to boost its economy, create new jobs, and lure venture capitalists, developers, and investors. Additionally, the state has taken measures to combine assets to stay as progressive as possible. Colorado has accepted alternative currency efforts to align with its marijuana industry. Altcoin, Potcoin, has been developed for the benefit of marijuana ventures. Novelty innovations, including marijuana vending machines that accept payment in the form of cryptocurrency has been developed and put to use. The state plans to continue to implement innovations like this to further its position as an attractive and inventive crypto and blockchain hub.
Kentucky: Just recently, Kentucky lawmakers approved a House bill providing tax breaks for crypto miners. The bill is being reviewed by the upper legislative house and has the potential to further draw cryptocurrency mining operations to the state. With approval of the bill, Kentucky has an opportunity to become a hubspot and leader for crypto mining, due to the state’s low energy rates and large supply.
Nevada: The desert state is looking to become the country’s crypto hub by passing a proposed bill that would give tech-based companies the opportunity to establish jurisdictions within an “Innovation zone.” The state is looking to diversify its economy and, ultimately, create jobs, and spur economic activity and revenue. A plan created by Nevada’s governor, Sisolak, would allow companies in eight fields, including blockchain, autonomous technology, the internet of things, robotics, artificial intelligence, wireless technology, biometrics, and renewable resource technology to set up their own ‘smart cities’ and form their own autonomous towns. The Innovation Zone proposal has concerned many, though, as people believe that these tech-based companies will gain excessive power. On the controversy, others believe that this proposal will not only empower people, but also empower Nevada’s economy. A study on the proposal estimates that this development has the potential to eventually generate $2.2 billion in direct output annually, which is approximately 1.3% of the state’s total economy activity.
New Hampshire: Due to the state’s large concentration of technology engineers and entrepreneurs, along with historically-high freedom ratings, New Hampshire has developed a strong cryptocurrency ecosystem. It is stated that its residents could functionally live entirely off of a Bitcoin or cryptocurrency income. Many businesses, including food shops, restaurants, real estate companies, law firms, and others accept payment in the form of Bitcoin. New Hampshire is part of the Free State Project, which is a political movement with beliefs in a decentralized ecosystem. In fact, the state’s motto is “Live Free or Die,” further promoting this concept of decentralization. Many of the state’s leaders, including governor Hemingway, have put forth their acceptance and promotion of cryptocurrency to endorse themselves and the productivity of the state. Many leaders, like Mr. Hemingway, are pushing for New Hampshire to become the next crypto hub, as their eased crypto regulation creates an environment where these businesses can succeed and spur economic growth for the state.
New Mexico: New Mexico is already known for its Bitcoin business, as the state is crypto friendly. In fact, the first Bitcoin ATM was placed in New Mexico, as its operator was able to efficiently comply with state laws. New Mexico’s economy has really suffered as a result of the COVID-19 pandemic. As a result, many of the state’s leaders are advocating for even more favorable crypto laws to be passed in an effort to stimulate the economy and attract business. The coming years will be filled with an eager push to help the economy recover by passing pro-crypto and blockchain legislation.
Texas: Texas thinks it is the perfect destination for crypto businesses to thrive, as it operates its own electrical grid, does not have an income tax, and has already started to introduce a pro-crypto regulatory framework for crypto exchanges. Although there are opponents, many leaders, including Steve Stockman, a United States representative for the 36th Congressional District of Texas, has voiced his opinion for a favorable crypto environment and incubator of innovation. Texas has established a council, known as the Texas Blockchain Council, to further the state’s growth in education revolving around blockchain and cryptocurrency. The council’s president, Lee Brachter, stated in an interview with Cointelegraph that “Texas will become one of the most favored jurisdictions for U.S.-based blockchain business and investments.” Furthermore, he states “we just want to come behind these states with Texas’ trillion-dollar economy, which will ultimately allow us to become the next big place where blockchain innovation happens.” Everything is bigger in Texas, and for the state, blockchain and cryptocurrency will be the next ‘big’ thing.
Miami, Florida: The sunshine state is looking to pioneer cryptocurrency mass adoption and lead the way to become a major crypto and blockchain hub. Florida believes it is the perfect environment to become a hotspot, as it not only has the attractive weather to lure people to the state but also has the benefits of a low income tax rate of zero percent. Although other cities in Florida are pro-crypto, Miami Mayor Frances Suarez is looking to quickly enact favorable crypto policies in an effort to become a major hub. The pro-crypto political leadership of Suarez offers the opportunity for crypto and blockchain innovation to develop, expand, and for the state to become number one.
New York, New York: Mayor Candidate Yang of New York City said in a tweet that “As mayor of NYC — the world’s financial capital — I would invest in making the city a hub for BTC and other Cryptocurrencies.” Although Yang wishes to make New York City a crypto hub, New York state must first pass its BitLicense proposal. Many pro-crypto individuals are pushing for the proposal to get fast tracked and approved so that New York has the potential to become the next crypto hot spot and leader.
Atlanta, Georgia: Atlanta is looking to become the next big crypto hub of the United States. Atlanta is home to some of the largest blockchain-based companies in the world, including BitPay. BitPay is a company that permits other companies to accept payments in the form of crypto on its websites. With such companies as BitPay established in Atlanta, many believe this could be an entryway for more companies to establish residency and thrive in the city’s tech ecosystem. Although Georgia does not necessarily have the most progressive pro-crypto laws, many are hoping that this will change as more tech giants put major offices, accelerators, and incubators in Atlanta.
It’s a Wrap
Many states and cities are looking to become the number one crypto and blockchain hub of the United States. The race to further pro-crypto regulation is on, and only time and policy will tell who will win the number one spot.
Jordana Cohen, Writer and Associate, Alpha Sigma Capital
Jordana joined Alpha Sigma Capital in November 2020 as writer and marketing associate. Jordana graduated magna cum laude from Tulane University with a business major in finance and a minor in Spanish. In addition to her academic accomplishments, she has substantive experience in management and marketing endeavors through her establishment of several start-up events to fundraise for pediatric cancer research. Alpha Sigma Capital is a pioneering digital asset fund that invests in growth companies, private and public equity, mergers and acquisitions, and special situations. Alpha Sigma Capital believes in a fundamental research approach for investing and supporting the blockchain economy; and, it is rigorous in determining the value of such organizations.