Crypto Payments: The Next Frontier in Mainstream Adoption

As the institutional and regulatory pivot towards more pro-crypto stances continues, one specific area where progress has remained limited is taxes and tax treatment. While crypto investors and advocates have achieved some success versus the SEC, the IRS has been less open to changes. However, with the recent introduction of a bill that would allow U.S. taxpayers to pay federal taxes using bitcoin, the conversation around crypto payments is gaining momentum.

Would Not Be The First In The U.S.

A piece of information that might come as a surprise to some crypto investors is that this proposed legislation is not the first time this has been suggested. In fact, Ohio was the first state to launch a pilot program allowing residents to pay certain state taxes and other fees using bitcoin before postponing the program in 2019 due to technical issues. Following this pilot, multiple other states, including Colorado and Florida, have also allowed residents to pay certain taxes and fees using bitcoin.

Do Bitcoin Investors Actually Want to Pay Taxes Using Bitcoin?

Tax policy aside, it is important to remember that the majority of bitcoin does not tend to be traded, despite the retail discussions on social media and recent institutional buying. Even taking into account recent profit-taking amid the bull market in 2024, the percentage of bitcoin that has not moved in the last 18 months remains at over 60%. Long-term holders are not a new phenomenon in the crypto marketplace, but the fact that such a large percentage remains unmoved despite recent market run-ups is indicative of the apparent low interest of bitcoin investors to spend bitcoin holdings.

Crypto payments are becoming increasingly mainstream

Mainstreaming Crypto Payments Is Good Policy

Since it remains unlikely that any bill that would cause substantive change to U.S. crypto policy will pass into law in the near to medium term, the analysis of any one specific piece of proposed legislation might seem like a moot point. That misses the larger importance of these proposed changes, as mainstreaming the idea of crypto payments across the board is a sign of how far the conversation has rapidly moved.

Bitcoin ETFs are also driving growth in crypto investing

Rising trust and a surge in Robinhood usage are also driving growth in crypto investment. According to CivicScience data, the percentage of Americans investing in cryptocurrencies is up over three points from 2022 to 11%, while all other forms of investment fell. What might be the reason for consumers becoming more willing to invest in crypto? Rising trust likely has a role to play, as ongoing CivicScience tracking of consumer trust in cryptocurrency shows that those who have at least a medium level of trust have risen by five percentage points to 28% since late June 2023.

Robinhood is driving growth in crypto investing

While many Americans remain cautious about cryptocurrency, and Bitcoin has faced recent turbulence, the sector shows signs of growth. Increased trust and the expanding use of platforms like Robinhood pave the way for a more robust crypto investment landscape.