The government of Bermuda has become the first in the world to accept cryptocurrency as a valid way for its citizens to pay taxes, financial services company Circle announced on 16 October.
According to the press release, more than 60,000 residents of the island nation will have the option of paying their “taxes, fees and other government services” using the USD Coin (USDC).
This move comes as part of the government’s wider initiative to support the use of “USD-backed stablecoins and decentralized finance protocols and services”.
Pegged to the U.S. dollar, USDC was launched a year ago and has already become the second most popular stablecoin in the world, with an issuance of $1 billion.
The issuer of the stablecoin, Circle, has also announced that it has received a “Class F” license under the government’s Digital Assets Business Act (DABA) of 2018, which allows it to build products and operations in Bermuda “that support a broad range of financial services built entirely on crypto and digital assets”.
Stablecoins have become a hot topic with regulators and governments as of late, even though many of them view such projects in a negative light, such as the Financial Stability Board (FSB) which released a report that assessed stablecoins as a risk to financial systems.
Others, on the other hand, have embraced the opportunity that comes with stablecoins, such as the Philippines-based UnionBank which has issued a stablecoin – PHX – and has already conducted a blockchain-based transaction with it.
Bermuda has been an innovator in the blockchain space for a couple of years now.
Back in 2017 it established a blockchain task force in conjunction with its Business Development Agency (BDA), which went on to pass an ICO legislation as well as to create a regulatory sandbox for crypto companies.
Earlier this month, blockchain startup Shyft Networks announced that it is working with the Bermuda government on launching a digital identity program, which will benefit individuals doing business in the country.