Kareem Tabba – Earlier this month, Miami’s city commission approved the first step of a resolution that would put Miami at the forefront of the Bitcoin and cryptocurrency revolutions. In a 4-1 vote, the city commission voted in favor of a resolution to study the feasibility of “diversifying [the city’s] investment portfolio” and holding a percentage of the city’s investments in Bitcoin. Additionally, the city will look into the practicality of integrating Bitcoin into the city’s tax and payments systems–that is, allowing city residents to pay fees and taxes in Bitcoin and allowing the city to pay its employees in Bitcoin. The approval is the latest development in Mayor Suarez’s plan to transform the city into a crypto-forward, regulatory-friendly environment.
The proposal is part of a larger initiative by Mayor Suarez to attract technology companies to Miami and make the city the next great technology hub. “We want to be one of the most crypto-forward and technological cities in the country ,” Mayor Suarez said in an interview with Fox Business News. Accordingly, Miami is planning on “creating a regulatory framework that makes [Miami] the easiest place in the United States to do business if you’re doing it in cryptocurrencies .”
Mayor Suarez would need legislative help, however, if his plans are to come to fruition. For example, as of this writing, the city cannot invest treasury funds unless specifically authorized by Section 218.415, Florida Statutes. Under Section 218.145, “[i]nvestment activity by a unit of local government must be consistent with a written investment plan adopted by the governing body[.]” Miami’s investment policy, released in February of 2015, lists fourteen authorized investments ranging from U.S. Treasury Obligations to Mortgage-Backed Securities to Local Government Investment Pools–none of which mention Bitcoin or any other cryptocurrency. Mayor Suarez would therefore need the help of the Florida legislature for his plans to move forward: “Mayor Suarez told CoinDesk.
The vote comes on the heels of Tesla’s announcement that it had purchased $1.5 billion in Bitcoin and would soon begin accepting payments for its product in Bitcoin. As one of the most valuable companies in the world, Tesla’s decision is a ringing endorsement for the granddaddy of all cryptocurrencies. In its annual filing to the Securities and Exchange Commission (“SEC”), Tesla asserted its goal was to “diversify and maximize returns on [Tesla’s] cash that is not required to maintain adequate operating liquidity.” Elon Musk, Tesla’s CEO, further rationalized the decision in a recent–and since-deleted–tweet: “when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.” These sentiments reflect concern over the value of the dollar in the aftermath of the COVID-19 pandemic, as the Federal Reserve continues to print seemingly endless amounts of money in an effort to prop up the U.S. economy.
And Tesla is not alone in embracing the digital token. Major financial institutions have also begun backing Bitcoin. A few days after Tesla’s filing with the SEC, Mastercard, the world’s second-largest payment network, announced its plans to offer support for a number of cryptocurrencies, including Bitcoin, on its network. PayPal, the world’s largest online payment system, is in the midst of integrating Bitcoin onto its platform with plans to launch the service later this year. BlackRock, the world’s largest asset management firm, revealed that it, too, has dipped its toes into the Bitcoin pool while BNY Mellon, the nation’s oldest bank, announced plans on launching a digital assets unit. Viewed in total, these initiatives, by some of the most influential and powerful companies globally, illustrate a seismic shift in the perception of Bitcoin and other cryptocurrencies by major institutional players.
Whether it be local government or powerful multinational corporations, Bitcoin’s acceptance continues to grow as it becomes clear that cryptocurrencies are here to stay. Thus, the legal community can expect a dramatic increase in crypto-related statutes and regulations across the country. As state and local governments compete for the first-mover advantage—cities like Miami are leading the race.