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Eric Adams’ hopes for a bitcoin boom in NYC are blocked by backward-thinking Albany

It made reliable headlines: Eric Adams tweeted that he wanted to pay his first three paychecks as mayor in Bitcoin. In the same tweet, Adams stated, “NYC will be the hub of the cryptocurrency industry and other fast-growing, innovative industries! Just wait! “

With all due respect to the elected mayor, his statement made many of us in the field smile. Unfortunately, New York is one of the least welcoming places in the country to bitcoin and cryptocurrency innovation – in fact, “just waiting” is what we’ve been doing for years.

Before we can operate in New York, companies that are active in this field are forced to comply with Byzantine government rules and regulations – including obtaining a so-called “BitLicense”. BitLicense requires a company to provide extensive financial disclosures and demonstrate compliance with countless cybersecurity and anti-money laundering rules, including audits. Companies also have to meet the highest capital requirements in the country.

All of this has scared off cryptocurrencies and bitcoin innovations in New York. The license can cost more than $ 1 million to acquire, and many companies in this space simply avoid the hassle. Because of the many roadblocks, my law firm is still not licensed in this state.

Only 20 companies have a Bitl license, according to the state’s Department of Financial Services. To give you a feel for the difficulty, PayPal’s license is conditional.

Both businesses and New York consumers are losing. Currently, New York State residents are prohibited from buying and selling bitcoins from non-state registered service providers – that is, almost everyone. As a result of these and other rules, countless cryptocurrency exchanges simply refuse to let New Yorkers on their platforms.

The hopefuls of cryptocurrency companies must spend more than $ 1 million just to have the privilege of doing business in the Empire State.REUTERS

Worse still, the leadership of the state has doubled that intransigence. Earlier this year, the state Senate passed a bill banning cryptocurrency mining in New York. Although it died in the congregation, it sent a disturbing signal that one of the two houses of the legislature is banning cryptocurrency mining. Financial and technological innovation will not materialize when half of your legislature tries to ban what is perfectly legal – and even encouraged – elsewhere.

Regulations and legal threats are hardly the kind of moves that will make New York 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 of the major players in the field emerged from the Big Apple.

Still, Adams’ ambition should be commended, and the man is right in attempting to position the city as a cryptocurrency hub. New York City has been the world’s financial capital for over a century and shouldn’t miss the next round of financial services innovation – ceding that ground to Austin, San Francisco, or Miami – because of the backward-looking thinking in Albany.

Pedestrians walk past the New York Stock Exchange in New York’s Financial District. New York City absolutely has the resources, infrastructure, and talent pool to become a major cryptocurrency hub – only Albany stands in the way.AP

Under the leadership of the new mayor, Gotham should use its local federalism muscles. The mayor can sound the trumpet and use political power to grow the industry in New York by first encouraging heads of state and officials to change the rules surrounding cryptocurrency and the regulations that prevent small blockchain startups from entering the Big Apple draw. This starts above all with the 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 the technology is the efficient and fast distribution of funds – a function that the urban bureaucracy takes on in the billions. He could encourage city authorities to transfer payments in Bitcoin, a process that would reduce the administrative burden and save tax money.

Mayor Adams would likely find an open-minded audience for Bitcoin innovation among his constituents. Many of New York’s leading technology and financial companies have shown an active interest in Bitcoin and its development. Bitcoin would also open doors for those outside of traditional finance, potentially creating thousands of new jobs for New York. The city has long been a magnet for talent, and the need for skilled, hard-working people in the Bitcoin space has never been greater.

Office buildings, which form the heart of Midtown Manhattan, are largely empty on March 04, 2021 in New York City.Mayor-elect Eric Adams’ ambition to attract cryptocurrency companies could boost the Big Apple’s economy after the pandemic.Getty Images

In other words, Adams’s enthusiasm is both profit policy and effective policy. He and other city guides are right to signal their interest in Bitcoin at a moment of growth and development for the sector. But words must match actions, and the mayor-elect must do more to make New York City usable for bitcoin.

This would enable him – and millions of others – not just to get paid in Bitcoin, but to benefit from the fruits of this technology in a meaningful way.

Alexander Leishman is the chief executive officer and co-founder of River Financial.

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