North Carolina Introduces Digital Asset Freedom Act to Enable Crypto Tax Payments
Overview of the Bill
On April 10, 2025, Representative Neal Jackson filed House Bill 920, known as the North Carolina Digital Asset Freedom Act, marking a significant shift in the state’s digital currency policy landscape.
Key Provisions
The act would amend Chapter 66 of the General Statutes to recognize qualifying digital assets as valid media of exchange and revise G.S. 105‑241 to permit tax payments in those assets.
Qualifying Criteria
To safeguard taxpayers and the state’s finances, only digital assets meeting rigorous standards—such as proof-of-work security, a capped supply, a minimum $750 billion market capitalization, daily trading volume above $10 billion, a decade-long hack-free history, proven censorship resistance, and 99.98% network uptime—would qualify.
Tax Payment Mechanism
Under Section 66‑516, individuals may choose to pay state taxes with approved digital assets, reporting the U.S. dollar equivalent at the time of payment. The Department of Revenue would maintain daily exchange rates on its website. These provisions are set to take effect January 1, 2026.
Political Context
This initiative follows North Carolina’s 2024 ban on central bank digital currencies (CBDCs), where the General Assembly overrode Governor Roy Cooper’s veto in August (House vote 73‑41) and September (Senate vote 27‑17), underscoring the legislature’s preference for decentralized cryptocurrencies.
Potential Benefits
Proponents argue that enabling crypto-based tax payments could bolster North Carolina’s reputation as an innovation hub, extend financial services to underbanked residents, lower transaction costs, enhance user privacy, and streamline revenue collection.
Risks and Concerns
Skeptics caution that the volatility inherent in digital assets, evolving regulatory landscapes, consumer education gaps, infrastructure constraints, and the environmental footprint of proof-of-work protocols must be addressed before widespread adoption.
Next Steps
House Bill 920 has been officially filed and is awaiting assignment to a committee, where legislators, industry groups, and taxpayers will have the opportunity to weigh in on its provisions.
Looking Ahead
If enacted, North Carolina would join a select group of states pioneering crypto-friendly legislation, potentially influencing federal policy and accelerating mainstream adoption of digital currencies.
What Stakeholders Should Do
Monitor upcoming committee hearings and public comment periods, explore integration options with compliant payment processors, and stay informed on regulatory developments to prepare for potential adoption of digital asset tax payments.