Bermuda’s residents can now pay their taxes in cryptocurrency. The government of the British Overseas Territory announced on October 16 that it will take payments in Circle’s USD Coin (USDC) “for taxes, fees and other government services.”
According to a press release by Circle Internet Financial, Bermuda will support USDC as an acceptable form of tax payment for the territory’s 60,000 residents.
USDC is a stablecoin pegged 1-to-1 with the US dollar. It was introduced a year ago by San Francisco-based digital asset exchange Coinbase and Circle. More than $1 billion in USDC has been issued between the two companies.
This will be the first time that a sovereign nation will be accepting a blockchain-based stablecoin for tax payment.
Support for various other “decentralized finance protocols and services” are also being considered as part of a larger project to integrate digital currencies into official government operations, the release noted.
Bermuda also revealed on Wednesday that it will be partnering with blockchain firm Shyft Network to develop a digital identity program, which would help individuals and businesses based in the country.
Commenting on Bermuda’s plan for encouraging USDC adoption, Circle CEO Jeremy Allaire remarked:
“Bermuda is focused on enabling financial services to be built and delivered using cryptocurrency and digital assets.”
The Bermuda government established a blockchain task force with the help of the Bermuda Business Development Agency (BDA) in 2017. The nation’s authorities also passed legislation on initial coin offerings (ICOs) and launched a regulatory sandbox for digital currencies.
In July 2019, Circle shifted its operations from the US to Bermuda due to the nation’s crypto-friendly business environment.
In November 2018, Ohio became the first US state to accept Bitcoin as payment for taxes. However, a subsequent political administration recently decided not to move forward with the Bitcoin tax policy due to potential conflicts with state law.
Other world governments including the Republic of the Marshall Islands and the People’s Republic of China are reportedly developing their own state-backed digital currencies.
Circle’s management noted:
“Governments everywhere will need to respond to this fundamental innovation. Hats off to [Bermuda] Premier David Burt, who continues to show more leadership on these issues and very much remains out ahead of other governments in the world.”