Cryptocurrency Transactions with Local Governments

Perhaps this post will start a conversation about how we can try to get cryptocurrencies accepted more widely. It can also serve as a place to discuss possible blowbacks of bringing the topic of cryptocurrencies up to local governments. Maybe there are some lawyers here who would be able to translate all the ideas here into legalese. I'm an engineer and not experienced with that stuff outside of Air Force instructions, checklists, etc. One rebuttal to this post (in the US) is that States are prohibited from making anything other than gold and silver a payment for debt. The answer to that is....how well are those Federal Reserve Notes working out for you when you go to pay state and local taxes (fees, fines, taxes, penalties, etc)?

Purpose

"The power to tax is the power to destroy"
A major stumbling block for the acceptance and spread of cryptocurrency use is the fact that in most locations taxes (taxes, fees, fines, etc) must be paid in the national fiat of their respective countries. In most areas of the world this must be addressed at the national level; however, in the US this can be partially addressed at the local and State levels. This post will cover some issues and present a basic framework readers can use to formulate proposals for presentation to their city councils. It is a draft, and by no means an exhaustive list of items to cover.

Basic Framework

1. Definitions

   1. "Payment" includes any tax, fee, penalty, debt, or other payment that may be owed to the city, or that the city may owe to another party
   2. "Cryptocurrency" includes tokens of any blockchain technology whose primary uses include acting as a ledger for transactions or recording ownership of assets
   3. "Token" includes any digital coin, token, or other unit of accounting used in a cryptocurrency system
   4. "Mining" includes any computational process done by computerized means to realize a cryptocurrency system, and any activity done to directly support such computerized means

2. Payments
   The city shall not, directly or indirectly,

   1. mandate payments be made using cryptocurrency
   2. compel the use of a particular cryptocurrency exchange or set of cryptocurrency exchanges
   3. act as a cryptocurrency exchange or the equivalent of a cryptocurrency exchange
   4. offer refunds or repayments in cryptocurrency for payments not made in cryptocurrency
   5. prioritize cryptocurrency payments to one payee or class of payees over another payee or class of payees
   6. make social service related payments using cryptocurrency

   The city shall,

   1. accept cryptocurrency for all payments, in part or in whole, to the city
   2. make refunds to parties in the same cryptocurrency it received payments from those parties
   3. accept, from parties who are owed payment by the city, all requests for payment, in part or in whole, in any cryptocurrency the city accepts

3. Mining and Posession of Cryptocurrency
   The City shall not, directly or indirectly,

   1. impose a tax on the posession or mining of cryptocurrency
   2. impose a tax on the transfer of cryptocurrency beyond the rate which transfers of the national currency are taxed at
   3. impose fees on the posession, mining, or transfer of cryptocurrency
   4. mine cryptocurrency
   5. impose any tax or fee on cryptocurrency mining equipment, labor, or materials beyond the taxes or fees associated with similar classes of computing and power equipment, technical and administrative labor, or other materials
   6. pass legislation which makes any cryptocurrency illegal
   7. pass legislation making the posession, mining, use, or transfer of cryptocurrencies the basis for criminal investigations
   8. compel parties to reveal wallet addresses for wallets not directly associated with conducting cryptocurrency transactions with the city, unless part of an existing criminal investigation
   9. may not compel parties to reveal private keys for any cryptocurrency wallet, unless part of an existing criminal investigation
   10. may not compel parties to reveal the location of cryptocurrency mining equipment, unless part of an existing criminal investigation

4. City Cryptocurrency Management
   The city shall not, directly or indirectly,

   1. impose convenience, use, or other fees for the use of cryptocurrency in transactions with the city
   2. contract out cryptocurrency acceptance, processing, accounting, or payment management services or equipment
   3. accept more payments in cryptocurrency than it has in cryptocurrency outlays

   The city shall,

   1. maintain its own staff and equipment for its acceptance, processing, accounting, and payment of cryptocurrencies
   2. offer an online method, without cost, to make payments to the city using cryptocurrency at any time
   3. offer an online method, without cost, to request cryptocurrency payments from the city
   4. maintain and make visible without cost, at any place the city may conduct cryptocurrency transactions with parties, a real-time display of the current exchange rate of any cryptocurrency the city accepts, as well as the city's current cryptocurrency outlay
   5. require any city official to submit to the city and keep up to date a list of their wallet addresses
   6. offer an online system allowing city officials to add new wallet addresses to the database at any time
   7. maintain a list of and make publicly accessable, freely and without cost, the wallet addresses of of all city officials
   8. impose criminal penalties for city officials who fail to submit to the city or maintain with the city a list of their wallet addresses

Section 2 Details & Intent
This section ensures payments of any type can be made to the city using cryptocurrency. This includes but is not limited to:

• Any tax
• Any fee (licenses, registrations, court costs, etc)
• Any penalty (fines, late penalties, etc)
• Any payment for products, property, or services rendered by the city to anyone
• Any payment for products, property, or services rendered by anyone to the city
  The exception to this are "social service" related payments. It also prohibits the city from making cryptocurrency mandatory, a particular cryptocurrency mandatory, or making the use of cryptocurrency exchanges mandatory. In addition, it prohibits the city from acting as a cryptocurrency exchange.

This section also prevents the city from prioritizing city officials and employees over others for cryptocurrency payments. The only prioritizations that should occur are first for refunds, and second for real-time payments.

Section 3 Details & Intent
This section prohibits the taxation of posession, mining, or use of cryptocurrencies.

Section 4 Details & Intent
This section forces the city to treat cryptocurrencies as it would the national currency. It also prevents the city from establishing cronyist relationships with banks, credit unions, or other financial institutions with regards to cryptocurrency payments, processing, and management.
Items 3 and 4 allow anyone to see the city's real-time cryptocurrency balance. This is useful, for example, if someone wants to make a payment to the city in cryptocurrency. If the city's balance is not negative, meaning its outlays are less than what has already been paid to the city, no payments can be made.
Items 5 through 8 attempt to keep city officials and employees accountable with regards to their own cryptocurrency use.