The public perception of bitcoin is quickly changing. Once regarded as the coin of the realm for cyber thieves, virtual currency is now accepted by big-name retailers as well as different cryptocurrency wallets are being introduced in the market for crypto users. Another sure sign of the currency’s growing acceptance is the guidance issued by three states on the tax treatment of the virtual currency.

The rationale of bitcoin, created by software developer Satoshi Nakamoto, was to produce a currency that transfers electronically with very low transaction fees. The “cryptocurrency” is not physically printed and therefore not controlled by a bank.

Similar to the emergence of other new technology, like the Internet of things, the sales and use tax implications surrounding these new advancements are often unclear. But that may be changing—California and Kentucky have both offered guidance to taxpayers on the issue of the taxability of online purchases made with bitcoin. Do sales and use tax apply to such transactions in the same manner as transactions paid using cash or credit card? Both states advise that sales and use tax apply to sales of tangible personal property purchased with bitcoin in the same way as it does with any other sale of tangible personal property for consideration.

The California SBOE explained that sales tax applies to the total amount of the sale or lease, whether received in money or other consideration, such as bitcoin. The Kentucky Department of Revenue said that any business that accepts bitcoins must convert the bitcoin into U.S. dollars before charging the applicable sales or use tax.

When customers purchase bitcoins using paper currency, is the electronic transfer of the bitcoins to the customer subject to sales and use tax? In a recent revenue ruling, the Missouri Department of Revenue ruled that the transfer of bitcoins to a customer’s electronic wallet are not subject to sales and use tax because bitcoins are intangible personal property, but future purchase using the bitcoins as a currency would likely be subject to sales tax.

The taxpayer that requested the Missouri ruling owns an ATM that allows the customer to purchase bitcoins by inserting paper currency. The department said that in Missouri, sales and use tax is imposed solely on items of tangible personal property and because bitcoin is intangible personal property, the taxpayer is not required to collect tax on the transfers.