7 Most Crypto-Friendly States in the US – Unexpected Entries
Posted On March 16, 2022
Since making a living from crypto is pretty much a remote job, crypto investors and traders are constantly looking for the most crypto-friendly states in the US.
But what does being a crypto-friendly state really mean? And is it always a good thing? What are some other regulatory factors you should consider?
These are questions that we must answer before moving on to the list of the 7 most crypto-friendly states in the US.
What Does a Crypto-Friendly State Mean?
So first off, let’s find out what makes a state crypto-friendly.
Regulations – The first and most fundamental criteria for crypto-friendliness is regulations around cryptocurrency.
A state should have laws and regulations that encourage people to invest in, trade or use crypto and not the other way around.
For example, New York is known for having some of the strictest crypto regulations.
One of the most popular crypto exchanges, Binance, is not available for New Yorkers.
Last year, New York banned one of the leading stablecoin, Tether (USDT), for economic and safety reasons.
Infrastructure – If a state has good infrastructure access that supports crypto businesses, it’s more likely to attract investors and traders.
For example, California has headquarters for multiple leading crypto exchanges and companies. Plus, over 2000 crypto ATMs.
Another example is Texas. Texas is attracting a lot of crypto and Bitcoin miners due to its low energy costs.
Taxes – The last but probably the most influential factor is taxes. Taxes are the primary motivation why many crypto investors change states.
While some states have no income taxes, others provide low tax rates.
While some states have friendly tax laws to attract crypto businesses and investors, others have stricter laws and higher tax rates.
Check out our crypto tax guide to know how crypto is taxed.
It’s Not Always a Good Thing Though
There’s nothing wrong with looking for the most crypto-friendly states, but keep in mind that just because a state has favorable tax laws, regulations and infrastructure doesn’t mean it’s an ideal place to be.
For starters, you have to consider the cost of living. Some states are cheaper and more affordable to live in compared to others. For example, the cost of living in California is higher than that in Nevada.
Then there are other downsides like less investor protection. States with fewer crypto regulations will also be riskier for investing and trading.
Last but not least, some people believe that more government regulations are a good thing and that they are there to protect us.
We don’t know if it’s true or not, but we can’t deny the fact that it’s a valid argument.
Alright. Now that all that is out of the way, let’s get to the list –
In the last few years, Wyoming has passed multiple bills and laws that made it one of, if not the most crypto-friendly states.
The most prevalent step the Wyoming government took in the direction of “crypto-friendliness” is to exempt state taxes on crypto transactions. This alone is enough to attract crypto businesses and investors into the state.
Wyoming is also the first to approve a crypto banking charter, which led Kraken to launch its Kraken Financial, also known as Kraken Bank – the first-ever crypto bank in the US, followed by Avanti Finance.
Other than that, Wyoming made it extremely easy for crypto businesses and startups to operate and grow.
And these are only highlights.
All in all, Wyoming is quickly becoming the leading cryptocurrency hub in the US.
We already spoke a little about California. Crypto Head named California the most crypto-ready state with a score of 5.72 out of 10.
Well, part of the reason could be its infrastructure, as one of the largest and most popular exchanges, Coinbase and Kraken, are headquartered in San Francisco. Plus, the state has over 2000 crypto ATMs.
Part of it could also be crypto’s growing popularity among Californian citizens.
Though California lacks crypto-friendly regulations compared to Wyoming, it doesn’t have a lot of “poor” crypto regulations either.
Nevada could become the next Silicon Valley real soon. The state recently passed a bill that will allow tech-based companies to create their own autonomous “smart cities” within an “innovation zone”.
One of the primary reasons for doing this is to attract more crypto and blockchain-based businesses, along with other tech-based businesses, like artificial intelligence, the internet of things, etc. They are aiming to boost their economy and create more jobs.
Plus, Nevada doesn’t have any state income taxes.
Florida, especially Miami, is trying really hard to make itself the next crypto hub.
Florida’s governor proposed that the state accept certain state taxes in cryptocurrency.
Miami’s Mayor, Francis Suarez, has also shown his leaning towards crypto multiple times.
First, when he started collecting his wages in Bitcoin. Then, he supported Miamicoin (MIA), a cryptocurrency developed by CityCoins, a company that gives Miami 30% of its revenue.
Texas has set up a council called the Texas Blockchain Council with the aim to provide better education, training and regulatory framework around blockchain and cryptocurrency, making it one of the most crypto-friendly states.
Since the state has no income taxes and has its own electricity grid, it has quickly become a hotspot of many crypto and Bitcoin miners, especially after China banned crypto.
Read our guide on crypto mining and taxes to know more about how crypto mining is taxed.
There is a competition though – Kentucky.
With its new law that provides tax breaks to crypto miners, combined with low energy costs and abundant supply, Kentucky could potentially beat Texas to the race of becoming the next crypto mining hotspot.
Similar to Wyoming, Colorado has all the intentions to create a crypto-friendly environment for new businesses to start and grow. The only problem is that it has been quite slow in doing that.
Nonetheless, its existing law and regulations are still pretty crypto-friendly.
Even if it’s not the most crypto-friendly state out of the ones on this list, it’s definitely blockchain-friendly, as Ohio is constantly looking for ways to integrate blockchain technology in different sectors of its economy.
Other than that, Ohio allows its residents to pay their taxes in cryptocurrency.
The Most Non-Crypto-Friendly States
Now that we know about the most crypto-friendly states, let’s quickly look at some of the most non-crypto-friendly states –
1. New York
Even though New York claims to be a pro-crypto state, it has some of the strictest crypto regulations in all of the US.
For a crypto exchange to operate in New York, it must have a license called the BitLicense. Many crypto exchanges, including Binance, aren’t available in the state. Some of these exchanges complained that getting the BitLicense is a very lengthy, costly and arduous process.
Some people believe that strict crypto regulations in New York are a good thing.
What do you think?
Unlike other states, Vermont is not the most non-crypto-friendly state because of its heavy and strict regulations, but because it has very little interest and infrastructure around cryptocurrency.
Remember the crypto-ready states title by Crypto Head we talked about earlier. Well, Vermont comes at the bottom of that list. That should explain a lot.
Hawaii has a promising future if they start loosening their tight regulations around crypto. But as of now, Hawaii is considered the worst state in terms of crypto-friendliness.
Due to similar but not the same regulations as New York, many popular crypto exchanges have stopped operating in Hawaii, including Coinbase and Robinhood.
The lawmakers in the state are trying their best to put Hawaii back on the map for the most crypto-friendly states. But as of now, it isn’t.
One of the perks of earning from crypto is that it’s almost always a remote job, meaning you can go around different states, even different countries, without losing your income source.
So, if moving to a different state, a more crypto-friendly state, enhances your life in any way, whether financially, in terms of your network or whatever, then why not.