One of the benefits of paying taxes using cryptocurrencies is that it promotes flexibility and freedom. People now have options on how to pay their taxes instead of depending on only fiat. Some people might be comfortable paying taxes using fiat. It could also help the government to raise more taxes since people who operate crypto-related businesses will also easily pay taxes. The government can also make some profit from cryptocurrencies of the price appreciates.

Some of the disadvantages I can think of is high transaction fees especially when the mempool is clogged by ordinal inscriptions. Another problem might be the volatility of cryptocurrencies which can make the government lose money if the price drops. The government might have to spend money on training staff and employing personnel who have crypto knowledge to manage the tax payment systems.