As cities like Austin, Miami, and New York City have launched – or are planning to launch – cryptocurrencies, the interest and activity in this space has rapidly advanced. Such high profile examples certainly generate quite a bit of buzz surrounding these cryptoassets, but the pace at which these cryptoassets have developed can also lead to some confusion.Getty Getty Images
Different cities and examples are going to operate uniquely, but there are a few core considerations that investors, regulators, and users of these cryptoassets should keep in mind. Especially given the dramatic increase in institutional interest and investment in an array of cryptoassets during the past year or so, it would be a simple matter to generalize and overlook the factors that differentiate these projects from one another.
No matter what specific example is referenced, however, it is clear that the interest and investment that cryptoassets continue to attract represents a fundamental change in how this sector is viewed by policymakers and regulators alike. Blockchain and crypto have now – inarguably – moved squarely into the mainstream. Leveraging these innovative solutions to improve public finances and local governments is an important step forward to wider adoption and, hopefully, regulatory clarity.
Put another way, if policymakers and governments are active users of crypto that should lead to more flexible frameworks to help encourage further development. Let’s take a look at some key considerations that should be taken into account
Crypto, not bitcoin. First things first it is worth pointing out that the CityCoin (the community of programmers supporting the examples highlighted above) initiatives that have launched do not mean that these jurisdictions are using bitcoin or other cryptocurrencies for transactional or payroll purposes. Rather, these cryptoassets run on the Stacks blockchain and are initially d...