Ohio Lawmakers Propose Bill to Protect Digital Assets from Additional Taxes

Introduction of House Bill 116

In a significant move for the digital asset community, lawmakers in Ohio have introduced House Bill 116, which seeks to prevent the state legislature from imposing taxes on digital assets when utilized as a payment method. The bill was introduced on February 24 by Representative Steve Demetriou, with co-sponsorship from several other representatives, including Tex Fischer, Brian Lorenz, Ty D. Mathews, Riordan McClain, and Josh Williams.

Key Provisions of the Bill

House Bill 116 aims to amend existing legislation to delineate how digital assets, such as cryptocurrencies, stablecoins, and non-fungible tokens (NFTs), are treated in terms of taxation. The proposed bill explicitly states, “The general assembly shall not enact a bill that proposes to impose a fee, tax, assessment, or other charge on digital assets used as a method of payment for goods and services.” This provision ensures that while taxes typically applied to legal tender, such as state and sales taxes, will continue to apply to digital transactions, no new tax levies will be introduced at the state level.

Furthermore, the bill is rooted in the principles of the “Ohio Blockchain Basics Act,” which stipulates that no state agency or political subdivision may bar individuals from accepting cryptocurrencies as a payment option for goods and services.

Rights to Self-Custody and Crypto Activities

In addition to addressing tax implications, House Bill 116 ensures that Ohio residents maintain their right to self-custody their digital assets utilizing hardware or self-hosted wallets. The legislation encourages participation in crypto staking without imposing unnecessary restrictions.

The proposal also clarifies that activities related to crypto mining, staking, and the exchange of digital assets for other cryptocurrencies will not require “money transmission” licensing under current Ohio laws. This is a notable provision for individual miners, as it allows them to conduct operations within residential areas, provided they comply with local zoning regulations. Additionally, it safeguards mining businesses located in industrial zones from being singled out by local zoning alterations.

Evaluation of Crypto Investment Risks

As part of its broader implications, House Bill 116 mandates that Ohio state retirement funds must assess the potential risks and benefits associated with investing in a cryptocurrency exchange-traded fund. The findings are required to be reported back to the General Assembly within one year.

Recent Crypto Legislation Efforts in Ohio

Ohio has seen a surge in proactive legislative measures related to cryptocurrency in recent months. Notable initiatives include a bill introduced by Senator Niraj Antani in September, requiring the state to accept cryptocurrency for tax and fee payments. Additionally, in December, House Republican Leader Derek Merrin proposed House Bill 703, which aims to establish a strategic Bitcoin reserve for the state. Also, in February, Senator Sandra O’Brien introduced another bill to create an “Ohio Bitcoin Reserve Fund,” proposing a five-year holding period.

Conclusion

House Bill 116 represents a thoughtful attempt by Ohio lawmakers to create a more favorable environment for digital asset transactions, striking a balance between regulation and innovation. As developments in the cryptocurrency space continue to evolve, this proposed legislation highlights Ohio’s commitment to navigating the complexities of the digital economy. The bill will undergo further scrutiny and deliberation as it moves through the legislative process.