Eric Adams’ hopes for New York bitcoin boom blocked by retrograde Albany

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It made reliable headlines: Eric Adams tweeted that he wanted his first three paychecks as mayor to be paid in bitcoin. In the same tweet, Adams said, “NYC is going to be the center of the cryptocurrency industry and other fast growing innovative industries! Hold on!”

With all due respect to the mayor-elect, his statement made many of us on the pitch laugh. Sadly, New York City ranks among the least welcoming places in the country for bitcoin and cryptocurrency innovation – indeed, ‘wait’ is what we’ve been doing for years.

Before they can operate in New York, companies that work in this space are required to navigate the Byzantine state’s rules and regulations, including obtaining what is known as a “BitLicense.” BitLicense requires a company to provide detailed financial information and demonstrate compliance with countless cybersecurity and anti-money laundering rules, accompanied by audits. Companies are also required to meet the country’s highest capital requirements.

All of this has deterred cryptocurrency and bitcoin innovation in New York City. Obtaining the license can cost over a million dollars and as a result, many companies in this space simply skip the hassle. My business is still not licensed in this state due to the many roadblocks.

According to the state’s financial services department, only 20 companies have a BitlLicense. To give you an idea of ​​the difficulty, PayPal’s license is conditional.

New York businesses and consumers are the losers. Currently, residents of New York State are prohibited from buying and selling bitcoin from unregistered service providers in the state, i.e. almost all of them. Due to these and other rules, countless cryptocurrency exchanges simply do not allow New Yorkers on their platforms.

Hopes of cryptocurrency firms must shell out over a million dollars just for the privilege of operating in the Empire State.

Worse yet, state leadership doubled down on this intransigence. Earlier this year, the State Senate passed a bill banning cryptocurrency mining in New York City. Although he died in the assembly, the fact that one of the two houses of the legislature banned cryptocurrency mining was a worrying signal. Financial and technological innovations don’t happen when half of your legislature seeks to ban what is perfectly legal – and even encouraged – in other places.

Regulations and legislative threats are hardly the kind of measures that will make New York City “the center of the cryptocurrency industry,” according to the mayor-elect’s boast. There’s a reason Blockchain.com moved its operations from New York to Miami last summer and so few major players in this emerging Big Apple space.

Still, Adams’ ambition is to be commended, and the man is right in trying to position the city as a cryptocurrency hub. New York City has been the financial capital of the world for over a century, and it shouldn’t miss the next round of financial services innovations – ceding this ground to Austin, San Francisco or Miami – due to Albany’s demotion. .

New York City absolutely has the resources, infrastructure and talent pool to become a major cryptocurrency hub – only Albany stands in the way.

Under the leadership of the new mayor, Gotham is expected to demonstrate local federalism. The mayor can sound the trumpet and deploy political power to grow the industry in New York City, starting by encouraging heads of state and officials to change the rules around cryptocurrency and regulations preventing small blockchain startups to settle in the Big Apple. It starts mostly with BitLicense, which is slowing the growth of the industry.

Adams could also start turning the city government into a bitcoin incubator. One of the most powerful uses of technology is the efficient and rapid distribution of funds – a function that municipal bureaucracy performs to the tune of billions of dollars. He could encourage city agencies to make bitcoin payments, a process that would reduce administrative costs and save taxpayers money.

Mayor Adams would likely find a receptive audience among his constituents for bitcoin innovation. Many of New York’s leading tech and financial companies have taken an active interest in bitcoin and its development. Bitcoin would also open doors for those not in mainstream finance and potentially create thousands of new jobs for New York City. The city has long been a magnet for talent, and the need for skilled and hardworking people in the bitcoin space has never been greater.

Mayor-elect Eric Adams’ ambition to attract cryptocurrency firms could revive the faltering Big Apple economy after the pandemic. Getty Images

In other words, Adams’ enthusiasm is both a winning policy and an effective policy. He and other city leaders are right to signal their interest in bitcoin at a time of growth and development for the industry. But words must match deeds, and the mayor-elect must do more to make New York City mineable for bitcoin.

This would allow him, and millions of others, not only to be paid in bitcoin, but to benefit from the fruits of this technology in a significant way.

Alexander Leishman is the CEO and co-founder of River Financial.

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