PayPal to Process Detroit’s New Crypto Tax Payment Program

TLDR

• Detroit will accept Bitcoin and Ethereum for tax payments starting mid-2025
• PayPal will manage the payment platform and convert crypto to USD
• Detroit becomes largest US city to accept crypto for municipal payments
• Program aims to increase financial inclusion for underbanked residents
• City seeking additional blockchain applications for civic services

Detroit is set to make history as the largest American city to accept cryptocurrency for tax payments when it launches a new payment system in mid-2025.

The city announced Thursday that residents will be able to use popular cryptocurrencies like Bitcoin and Ethereum to pay their taxes and municipal fees through a PayPal-managed platform.

The initiative represents a major step in Detroit’s efforts to modernize its municipal services and attract technology investment. Mayor Mike Duggan emphasized the city’s commitment to creating a technology-friendly environment during the announcement.

“Detroit is building a technology-friendly environment that empowers residents and entrepreneurs,” Duggan stated.

To address concerns about cryptocurrency’s price volatility, the system includes automatic conversion of crypto payments to US dollars through PayPal before the funds reach city accounts.

This measure ensures stable value for the city’s revenue while allowing residents to use their preferred digital currency for payments.

The program builds on PayPal’s growing presence in the cryptocurrency space. The payment provider first entered the crypto market in October 2020, when it began allowing US customers to buy, hold, and sell various digital assets through their accounts. The company later expanded these services to the United Kingdom in August 2021.

PayPal’s role in Detroit’s initiative follows its recent expansion of cryptocurrency services to business users. In September 2024, the company announced that US merchants could buy, hold, and sell digital assets like Bitcoin and Ethereum from their business accounts. The decision came in response to increased demand from business owners for cryptocurrency capabilities.

The payment giant further demonstrated its commitment to digital currency innovation with the launch of its own stablecoin, PYUSD, in August 2023.

By April 2024, PayPal had begun allowing US customers to use PYUSD for international payments, showing the company’s growing integration of digital currencies into its service offerings.

Detroit’s cryptocurrency payment program aims to increase financial inclusion, particularly targeting residents who have limited access to traditional banking services. The digital payment option provides an alternative method for these individuals to interact with city services.

The initiative forms part of a broader strategy to position Detroit as a hub for technological innovation. Justin Onwenu, Detroit’s Director of Entrepreneurship and Economic Opportunity, has expressed openness to proposals for additional blockchain applications in civic services.

“Blockchain technologies have the potential to drive greater accessibility and efficiency,” Onwenu stated, highlighting the city’s interest in attracting forward-thinking entrepreneurs and innovators.

Detroit joins several other states that have embraced cryptocurrency payments for public services. Colorado, Utah, and Louisiana have implemented similar programs, though Detroit’s initiative represents the largest municipal adoption to date.

The city’s technology modernization efforts extend beyond payment systems. Officials are actively seeking proposals for other blockchain applications that could improve city operations, focusing on areas where the technology could enhance transparency, security, and efficiency.

Implementation planning is currently underway, with city officials working alongside PayPal to ensure a smooth launch in 2025.

The system will initially accept Bitcoin and Ethereum, with the possibility of adding other cryptocurrencies in the future based on user demand and market conditions.

Technical teams are developing user interfaces and security protocols to make the payment process accessible to residents while maintaining robust protection of financial transactions.

The city plans to release educational materials ahead of the launch to help residents understand how to use the new payment option.

The announcement has drawn attention from other municipalities watching Detroit’s implementation as a potential model for their own digital payment initiatives.

The city’s approach to managing cryptocurrency volatility through immediate conversion to US dollars provides a framework that could be adopted by other local governments.

Local business leaders have expressed support for the initiative, viewing it as a step toward establishing Detroit as a competitive location for technology companies and digital innovation. The city’s willingness to embrace new financial technologies could help attract investment and entrepreneurial talent to the region.