Last week the governor of Florida announced plans to become the second state to accept Bitcoin (BTC 0.22%) (BTC 0.22%) as payment for state taxes. About a month ago, Colorado's Governor Polis made a similar announcement, in hopes of making the state more crypto-friendly. At the Sunshine State's recent press conference, Governor DeSantis remarked he has instructed "state agencies [to] figure out ways where if a business wants to pay tax [with] cryptocurrency to Florida we should be willing to accept that."
It doesn't seem that long ago that politicians were portraying Bitcoin and other cryptocurrencies as something similar to the "Wild West". It's safe to say much has changed.
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Bitcoin crosses the aisle
The gravity of this announcement may have not made its way through the financial world quite yet. But in short, it's this: Colorado is a historically Democratic state. And Florida tends to lean Republican. Bitcoin seems to have officially bridged the bipartisan gap.
Both parties embracing crypto is a bullish signal. With support from politicians, legislators may continue to adopt friendly laws that further support its utility.
Political recognition of Bitcoin would have been a pipe dream just two years ago, but here we are. What comes next for Bitcoin? I foresee more adoption and more users. Both of these factors could drive up prices.
Even if states are skeptical about Bitcoin, some local governments may feel forced to join so as not to risk being left behind. In January, Arizona Senator Wendy Rogers introduced a bill that would designate legal tender status to Bitcoin. While not official legislation yet, it is still progress nonetheless. If the adoption trend continues to play out at a legislative level, the rise of Bitcoin seems inevitable.
Bitcoin and The Feds
On the horizon, investors should watch the steps taken by the Federal Government in the near future. President Biden recently announced an Executive Order aiming to increase protection for consumers, monitor illicit activities, look further into crypto and climate change, and take further steps in the development of a Central Bank Digital Currency (CBDC). Most of this regulation will target smaller cap cryptocurrencies that do not have the track records like some of the "blue chip" cryptos such as Bitcoin and Ethereum. Nonetheless, it's a big step for the United States.
Perhaps the biggest step is a reference in the Executive Order to maintain a competitive edge in cryptocurrencies internationally. A Federal mandate to foster a crypto-friendly economy should be viewed as a positive development and another step forward in the evolution of mainstream crypto adoptions.
With Bitcoin trading sideways for about the last four months despite many positive developments, investors should be loading up at these prices. In a volatile and risky asset class, small cap cryptos might be more prone to regulation. But Bitcoin is the safe haven. Use this time as an opportunity to gain some more exposure to one of the greatest performing assets in history.
