NEW YORK, (AP) -- A group of cryptocurrency enthusiasts have an offer they hope U.S. cities will not refuse.
City Coins asks New York and Miami to accept the equivalent to millions of dollars in a cryptocurrency. Last week, Mayor Francis Suarez of Miami announced that City Coins had transferred $5.25million to the city.
Leaders in other cities like Dearborn, Michigan and Philadelphia are clamoring for a partnership with the group.
This has not happened, and there are many legal and technological hurdles that must be cleared before it can.
First, cryptocurrencies' value can fluctuate greatly. Bitcoin, a popular cryptocurrency, lost nearly half of its value between November 2017 and January 2018. It fell from $67,500 to just over $35,000, but it has since rebounded to $43,000. Criminals love the anonymity of cryptocurrency. There are many scams in cryptocurrency trading.
The proposal expands upon the blockchain technology that supports Bitcoin and other cryptocurrency. Miami Coin is a place where people can invest to help the city. A portion of the investment goes to the city. The remainder is split among Miami Coin investors. The system favors those who invest more and those who enter early.
If everything goes according to plan the prices of the new cryptocurrency will rise, which means that the city will get free money, and those mining Miami Coin will also benefit.
Participants in the City Coins Project hope that Miami residents can eventually hold their identity, pay taxes and vote using the blockchain technology Miami Coin was built on. This will increase the coins' value. These possibilities are not mentioned in the contract City Coins signed to Miami.
City Coins claims that the proposed arrangement is not an entity but a type of collective. This makes it unusual in terms of economic development. Its website doesn't list any contact information or employees, but it does include a link to Discord, a messaging app. It is registered as a Delaware nonprofit organization. It is not listed online.
Andre Serrano, the community lead, estimated that there are between 10,000 and 15,000 City Coins members. However, he is basing his estimate on City Coins Twitter followers as well as the Discord chat participants.
Suarez stated that cryptocurrencies cannot be legally held in the city. He stated that City Coins is the custodian of Miami’s rewards, until they are converted to dollars and formally gifted the city. The first $5.25million was given February 2.
To give an idea of scale, Miami's October operating budget was over $1.3 billion.
Suarez stated that education is a priority and said, "We have many ideas about how we can spend this money."
John Forrer, a research assistant at George Washington's policy school, says the unusual arrangement could lead to problems for any municipality that signs on.
"There's so much uncertainty, it's so new, are you certain you've examined all of the risk and have a plan to handle them?" he stated, adding that it's crucial the city can hold any outsider accountable if necessary.
Stanley is the point of contact for City Coins with the Miami. He has an address in a Los Angeles strip-mall. In interviews about Miami Coin, he has been identified as the community leader for City Coins. He has also appeared with Suarez. He didn't respond to questions regarding the organization and structure of City Coins. Stanley stated in public statements that he used to work with Stacks, which is the cryptocurrency ecosystem on which City Coins is built.
Liat Shetret is the director of regulatory affairs at Solidus Labs and a compliance policy officer. She suggested that cities might be interested in blockchain technology to improve financial transparency. She is concerned that politicians are selling cryptocurrencies to grab attention, but not preparing their cities to deal with new problems like money laundering.
Because of the nature of blockchain, it is possible to see which accounts are mining Miami Coin. However, it is not possible to identify the identities of those individuals. The basic information that currency exchanges require is names, addresses, and Social Security numbers. It's not clear how much information the coin creators have. Participants don't need to reside in Miami.
Stacks Foundation, Stanley and Suarez did not respond to questions about whether they had access to personal information about Miami Coin participants.
Shetret stated that it was crucial to keep bad actors from using these platforms.
Eric Adams, New York's mayor has been an advocate for cryptocurrencies. However, his administration has yet to sign on to the project despite having celebrated the launch of the New York City Coin in November.
Adams' office didn't respond to questions regarding whether Adams was contemplating accepting funds from City Coins.
New Yorkers can't buy the New York Coin at the moment because the only exchange that offers it isn't licensed. Larissa Bundziak spoke for Okcoin. She stated that they are optimistic that the New York coin will be approved by mid-year. Okcoin began offering the New York coin to non-New Yorkers on Jan. 26.
Some City Coins participants were disappointed with the progress of the experiment and decided to argue in a Discord chat room about whether they should launch cryptocurrency in new cities or wait until the coins are worth more in New York and Miami.