In brief
- New York State Assemblymember Phil Steck proposed a 0.2% excise tax on cryptocurrency transactions.
- He estimates that the tax would generate $158 million annually, based on Chainalysis data from 2022 to 2023 and recent GDP statistics.
- The revenue would help combat substance abuse in upstate New York.
New York Assemblymember Phil Steck introduced legislation on Wednesday that would generate sweeping tax revenues from cryptocurrency transactions across the state.
Under Bill A0966, the Empire State would immediately impose a 0.2% excise tax on crypto transactions, using the proceeds to help schools combat substance abuse in upstate New York, where the opioid epidemic has severely impacted communities for years.
In a bill memo shared with Decrypt on Friday, Steck estimated that the levy would generate $158 million in annual revenue from “crypto investors [that] are driven by a single motive: the desire for quick and instant wealth.”
“The funding shall be used to expand the substance abuse prevention and intervention program to schools in upstate New York,” a separate description of the bill states.
Steck, a Democrat, chairs New York’s Standing Committee on Alcoholism and Drug Abuse, and the group oversees the state’s Office of Addiction Service and Supports, which serves over 730,000 individuals per year, according to an annual report. In 2023, 33 out of every 100,000 New Yorkers lost their lives to drug overdoses, the report notes.
The legislation comes as some states push forward with other crypto-related initiatives to assist schools as well, like Wyoming, where cash generated by the reserves of its soon-to-be-released stablecoin will get swept into the Cowboy State’s education fund.
As of 2023, cryptocurrencies like Bitcoin were treated as cash equivalents for tax purposes in New York, among seven other states, including California, according to Bloomberg Tax. A more recent tax guide from crypto accounting software firm Bitwave says that digital assets are already subject, like other assets, to capital gains tax, gift tax, and estate tax in New York.
In its initial form, the scope of Steck’s bill is broad, with tax implications for NFTs, digital assets obtained through mining and staking, as well as stablecoins, based on its text.
The New York Department of Financial Services, which regulates crypto firms through its BitLicense regime, would not provide Steck with data on the volume of crypto transactions, his memo notes. In a quarterly report, the regulator said it supervised 845 million transactions across 20 total institutions in 2024, but did not include the dollar amount.
The data likely doesn’t capture residents’ crypto transactions as well, so Steck found a workaround: He took the dollar-value of cryptocurrency that crypto analytics firm Chainalysis said was sent to the U.S. between July 2022 and June 2023, roughly $1 trillion, and adjusted that based on New York’s share of U.S. GDP in 2024, yielding $79 billion.
That number could be higher, with New York City serving as the epicenter of the financial world and home to a growing number of crypto-native firms like stablecoin issuer Circle, crypto exchange Gemini, and institutional firm Galaxy Digital.
Steck highlights scrutiny that the digital assets industry faced following the collapse of crypto exchange FTX in 2022, saying it has been “vulnerable to fraud and scams.” The memo lists Gemini, among other firms, as companies that were accused of defrauding clients.
Decrypt reached out to Gemini for comment, but did not receive a response.
New York State Attorney General Letitia James recovered $50 million worth of digital assets from Gemini through a settlement last year, after accusing the exchange of misleading investors about risks associated with its Earn platform.
In 2023, James brought a lawsuit against the exchange, bankrupt crypto lender Genesis, and crypto conglomerate Digital Currency Group for allegedly defrauding 230,000 investors out of more than $1 billion.
Steck’s memo also highlights the enormous amount of energy that computers consume when participating in the process of mining, or validating Bitcoin transactions, describing the environmental impacts of cryptocurrencies as “another downside.”
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