Ohio House Approves Bill Exempting Crypto Transactions Under $200 From Capital Gains Tax

The Ohio House of Representatives has approved a significant bill aimed at enhancing protections for cryptocurrency and exempting crypto transactions below $200 from capital gains taxes. The legislation, known as House Bill 116 or the Ohio Blockchain Basics Act, was passed with a vote of 70-26 and will now proceed to the state Senate before reaching Governor Mike DeWine's desk for final approval.

The bill, primarily supported by Republican Representative Steve Demetriou, focuses on two main objectives: facilitating easier crypto payments and safeguarding digital asset mining businesses from discriminatory government interference. The legislation received bipartisan support, passing the Technology and Innovation Committee with a unanimous 13-0 vote earlier in the day.

One of the key provisions of the bill is the exemption of all crypto transactions under $200 from capital gains taxes. This threshold will increase annually in line with inflation, adjusted according to the Consumer Price Index and rounded up to the nearest $5. The bill also prohibits the state's tax commissioner from lowering this limit once it has been raised and prevents the state government and its agencies from implementing rules that restrict residents from accepting crypto as a payment method.

In addition to tax exemptions, the bill aims to open up crypto mining by allowing individuals to mine crypto in residential zones, provided they comply with local noise regulations. Crypto mining businesses that adhere to local regulations will be permitted to operate in any area zoned for industrial use. The legislation also ensures that the state does not enforce laws or rules specific to crypto mining businesses that do not apply to other similarly situated businesses. Furthermore, the bill prohibits the state from rezoning land that affects crypto mining operations without following the proper notice and comment process, allowing aggrieved miners to challenge rezoning decisions in court if they believe they are being discriminated against.

The Blockchain Basics Act also deregulates various activities related to blockchain operations. It states that no money transmitter license is required for actions such as crypto mining, staking, operating a blockchain node, exchanging one cryptocurrency for another, or developing software that facilitates crypto swaps. Additionally, the bill clarifies that businesses providing crypto mining or staking services are not considered to be offering a security or investment contract, a stance that contrasts with federal regulators' arguments under the Biden administration. The legislation also prohibits the government and its agencies from implementing rules that hinder Ohio residents from taking custody of crypto using hardware or self-hosted wallets.

Ohio is also considering another bill that would establish an "Ohio Bitcoin Reserve Fund," introduced in January and referred to the Financial Institutions, Insurance, and Technology Committee. This fund, if approved, would further solidify the state's commitment to integrating cryptocurrency into its financial ecosystem.

Overall, the passage of House Bill 116 represents a significant step forward for Ohio in embracing cryptocurrency, providing a more favorable regulatory environment for crypto transactions and mining operations. The bill's provisions aim to protect digital asset businesses from discriminatory practices and encourage the use of cryptocurrency as a legitimate payment method within the state.