That's not the primary thing the USD is used for. Paying US federal and some other taxes is one of several things that the US dollar is the sole thing used for, but that is very different than being the primary thing it is used for.
But unless they are denominating tax debts in Bitcoin, it's not meaningfully different than exchanging bitcoins for dollars to pay taxes, just a little more convenient.
Sure.
> Legally you cannot pay taxes in any other currency than USD.
Sure. But though that two sentence pair is both true and includes the word “primary” and a reference to “USD” and paying taxes, it doesn't support th conclusion that the primary use of USD is for paying taxes.
I'm also pessimistic that this will be used. The new taxes on cryptos that the feds put in place have done a great job at icing speculation and making people's lives a living hell should they engage in crypto-trading (a pretty darn good disincentive). I think the federal government is well on its way to killing crypto currencies already.
That means Ohio is putting the USD in competition with cryptocurrency for the primary thing the USD is used for: Paying Taxes. Federally that's going to remain USD of course, so it's not an existential threat for the Fed, but if enough states move to crypto as an option for tax payments the Treasury/Fed is going to have to make some major moves to prevent it spreading.