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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
legal tender; cryptocurrency
Purpose
Defines legal tender to include cryptocurrency and applies the definition to all Arizona Revised Statutes.
Background
Statute defines legal tender as a medium of exchange, including specie, that is authorized by the U.S. Constitution or U.S. Congress to pay debts, public charges, taxes and dues. Specie are coins having precious metal content. Any gains or losses derived from the exchange of one kind of legal tender for another is exempt from individual and corporate state income tax (A.R.S. §§ 6-851; 43-1021; 43-1022; 43-1121; and 43-1122).
A trust company must apply to the Department of Insurance and Financial Institutions for a certificate to be eligible to do trust business in Arizona. To obtain a certificate, a trust company must have at least $500,000 of liquid capital which may consist of legal tender (A.R.S. §§ 6-851 and 6-856).
If a video service provider occupies or uses a highway within a local government's boundaries, the video service provider must pay a license fee to the local government. The license fee must be paid to the local government in a check, draft or note or ACH transaction that is payable in legal tender (A.R.S. § 9-1443).
If including cryptocurrency in the definition of legal tender results in an increase or decrease in the state income tax exemption for gains and losses derived from the exchange of one kind of legal tender for another, there may be a fiscal impact to the state General Fund.
Provisions
1. Defines legal tender as:
a) any medium of exchange that is authorized by the U.S. Constitution or U.S. Congress for the payment of debts, public charges, taxes and dues;
b) specie which are coins having precious metal content; and
c) cryptocurrency which is any form of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of monies, including Bitcoin, XRP, Ethereum, Litecoin and Bitcoin Cash.
2. Applies the definition of legal tender to all Arizona Revised Statutes, including:
a) the state income tax exemption of gains and losses derived from the exchange of legal tender;
b) the requirement for a trust company to have at least $500,000 of liquid capital, which may include legal tender; and
c) the video service provider license fee that may be paid by an ACH transaction payable in legal tender.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
· Removes digital currency issued by a central bank from the definition of legal tender.
Senate Action
FIN 1/27/25 DP 4-3-0
Prepared by Senate Research
February 24, 2025
MG/ci