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The crypto market has been very volatile in recent weeks with Bitcoin (BTC) plunging below $30,000 before recovering to its current price above $31,000. Despite this scenario, Gold Coast Australia Mayor Tom Tate is convinced that accepting crypto as payment for local taxes could be beneficial, a proposal that was opposed by critics who view the price volatility of digital currencies to be a cause of concern.
Local tax rates in Gold Coast are expected to increase by at least 4 percent this year, the highest increase in ten years, according to local media outlet ABC News. Mayor Tom Tate suggested accepting crypto as one of the payment methods for these taxes adding that price volatility is not a major issue.
“Why can't we pay rates on cryptocurrency if the risk is not high?” Tate spoke to ABC News on June 5. “The volatility is not that bad.”
The mayor opined that doing so could bring in benefits such as greater involvement from the younger populace. “It sends a signal that we're innovative and bring in the younger generation ... [but] I'm not saying we're doing it, I'm just saying we're always looking at the next level,” Tate added.
The country’s national blockchain industry group welcomed the proposal and it certainly is possible considering that a number of jurisdictions have already started accepting crypto payments as well. “Little bit of software, some applications, and you can accept Bitcoin as payment,” Blockchain Australia Chairman Adam Poulton said, describing crypto as “just another form of money” with an exchange rate linked to the dollar.
“They can choose to receive that Bitcoin and hold it themselves, or they can actually exchange that Bitcoin into Australian dollars, referencing that exchange rate, and have those Australian dollars turn up in their bank account,” Poulton added.
However, the Blockchain Australia chair admits that there are risks associated with crypto payments and suggested that the council needs to look at its risk appetite first. One such risk, is the potential devaluation of the crypto should they decide to keep the asset.
“The last thing they'd want to do is accept $2,000 worth of rates, hold it in Bitcoin and for the Bitcoin price to halve,” he said.
Another risk is missing out on potential gains by converting the crypto to fiat just as its price is going up. “The other risk is the Bitcoin could go up in value and they'll actually have three or four thousand dollars,” he explained.
Poulton said that one way to manage volatility related risks is to keep the council’s crypto holdings to a certain cap and suggested that a 5 percent crypto and 95 percent AUD mix. “We're happy to risk that other five per cent and actually hold that and see what future use cases could be used with it,” he said.
