US city of Detroit to accept cryptocurrency for tax payments
Detroit’s city administration is to become the latest US authority to enable residents to pay taxes and other city fees using cryptocurrency.
The city’s Office of The Treasury has announced that people will have the option to pay taxes using crypto through a secure platform managed by PayPal. It says the move would make the Michigan city the largest US city to accept cryptocurrency as a form of payment for city fees and taxes.
Three US states’ revenue departments – Colorado, Utah and Louisiana – already accept crypto for payments to public sector authorities.
Detroit’s announcement came soon after the presidential election was won earlier this month by Donald Trump, who has positioned himself as a crypto enthusiast.
The crypto payment option is set to become available in Detroit in “mid 2025” along with “additional improvements to city payment services”, treasurer Nikhil Patel said.
Read more: Massachusetts municipality issues bond via blockchain in US public sector first
‘Increasing accessibility’
Detroit says the planned enablement of crypto payments is part of a strategy “to explore innovative technologies that could enhance public services, strengthen civic engagement and foster economic growth”.
“The initiative not only makes it easier for Detroit residents to transact with the city but also marks Detroit’s commitment to welcoming blockchain and technology entrepreneurs who want to make a difference in the city,” the announcement said.
“Detroit is building a technology-friendly environment that empowers residents and entrepreneurs,” commented Detroit mayor Mike Duggan, a Democrat who has served for three terms since 2014. “We are excited to be one of the first major US cities to explore blockchain’s civic applications and allow residents to use their cryptocurrency as a payment option.”
“The Treasurer’s Office is committed to modernising our payments channels and processes to enhance the customer experience and improve internal operational efficiency,” Patel added. “This new payment platform will increase accessibility for Detroiters who would like to use cryptocurrency. More importantly, the platform upgrade will also make it easier for Detroiters to make electronic payments – including those who may be unbanked.”
Detroit’s population was about 1.8 million in 1950 but the city suffered decades of industrial decline and became the biggest US city ever to file for bankruptcy in 2013. Finances have since recovered and its population is now about 633,000.
Blockchain ‘civic applications’ push
The City of Detroit is also inviting “blockchain entrepreneurs and innovators” to pitch ideas for “blockchain civic applications” to Justin Onwenu, who was appointed as Detroit’s first director of entrepreneurship and economic opportunity in August.
Those involved are “particularly interested in projects that leverage blockchain’s potential for enhancing transparency, improving data security and streamlining public services”.
Proposals need to include descriptions of proposed solutions, “potential stakeholders, costs [and] risks” and “should also outline how their ideas will improve city services and benefit city residents”. The deadline for submissions is 15 December 2024.
“This announcement represents our openness to new ideas and dedication to positioning Detroit as a place for entrepreneurs and bold ideas to thrive,” said Onwenu. “Blockchain technologies have the potential to drive greater accessibility, efficiency, transparency and security and we’re excited to hear from entrepreneurs at the forefront of this work.”
Other localities in the US accepting crypto payments are the small city of Williston, North Dakota (for utility bill payments). The city has partnered with uniquBitPay to facilitate these transactions.
Read more: From blockchain to digital currencies: The evolving ‘fintech for government’ agenda
Colorado, Utah and Louisiana’s moves
Colorado’s revenue department began to accept tax payments in cryptocurrency just over two years ago.
State governor Jared Polis announced that a cryptocurrency payments option had been introduced on Colorado Department of Revenue’s online payments portal, and that crypto payments were possible for all taxes, including individual and business taxes, income tax, sales tax and withholding tax.
Similar to Colorado, Utah uses a third-party processor to handle crypto transactions, ensuring the state receives payments in US dollars.
Louisiana announced that it had begun accepting payments in Bitcoin, Bitcoin Lightning and USD Coin less than a couple of months ago. It said the first such payment was made on 17 September to the Louisiana Department of Wildlife and Fisheries.
The southeastern state is working with a US company called Bead Pay, which it described in an announcement as a “unique provider of cryptocurrency conversion of point-of-sale payments”. The state authority will not handle cryptocurrency directly as it will ultimately receive payments in US dollars. Cryptocurrency “price volatility is avoided”, the state said, adding that any digital wallet with cryptocurrencies can be used.
Trump trumpets crypto
Cryptocurrency is both volatile and controversial. Many governments worldwide are currently more focused on working out how to regulate crypto rather than encouraging citizens to use it.
President-elect Trump, however, has presented himself as a crypto enthusiast. The Republican Party’s election platform, which outlines key policies and was published in July, stated that: “Republicans will pave the way for future economic greatness by leading the world in emerging industries.”
“Crypto Republicans will end Democrats’ unlawful and unAmerican crypto crackdown and oppose the creation of a Central Bank Digital Currency,” it went on. “We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their digital assets, and transact free from government surveillance and control.”
This echoed Trump’s pledge back in January to block a potential US central bank digital currency.
Outside the US, in 2021 El Salvador became the first country in the world to allow Bitcoin to be used to pay taxes or buy goods and services.
At a city level, 11 months ago Lugano in Switzerland enabled citizens and companies to make any municipal payment using Bitcoin and Tether. Crypto payments in Lugano were already possible for some transactions via the city’s online portal.
This story was originally published on GGF’s sister title Global Government Fintech
About Ian Hall
Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.
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