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Front Page » Opinion » Should county be sound as a dollar or sound as a crypto?

Should county be sound as a dollar or sound as a crypto?

Written by on August 17, 2021
Should county be sound as a dollar or sound as a crypto?

Talk about a paradox: one county effort aims to require all businesses to accept cash, while another probes whether the county itself should accept crypto payments.

Back-to-back articles in Miami Today last week on the two county aims highlight technological change that divides haves from have-nots and the tech-savvy from other generations. 

One issue is how to move forward without backwatering hundreds of thousands of fellow citizens who won’t, or can’t, keep up with change. Another is what local government’s role is in either accelerating change or holding onto the ways we live.

In trying to make sure cash is still accepted for debts, goods and services, Commissioner René Garcia won a unanimous OK in May to ask the mayor’s office to report on requiring businesses to accept cash rather than forcing customers to pay via credit card.

“The perfect example,” he said, “is when you do the parking. Now, if you don’t have a credit card, you don’t have an app, you can’t pay in cash, and that itself is a problem.” He’s certainly right about that – a segment of society is frozen out. And make no mistake, some Miamians lack a single credit card.

The other side of that coin, however, is the cost to a business to accept cash at, for example, a parking lot or garage. It requires machines and manpower to handle the cash, either directly from the public or from the machines. Is it right to force a business to staff up to take cash?

Right or wrong, no federal law requires anyone to take cash for goods, services or debts. The Coinage Act of 1965, according to the Treasury Department, says all US money is legal for payments but there is “no federal statute mandating that a private business, a person or an organization must accept currency or coins for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.”

Central banks printed bills with larger and larger denominations in the inflationary 1920s.

Note that the exception is a state law, not a city or county regulation. A cash requirement must come statewide via an act by the Florida Legislature. Other cities have tried to circumvent the Coinage Act. The mayor’s report must detail their success, or failure, at doing that.

While the mayor’s report is awaited, six commissioners have yet to appoint members of a task force probing whether the county should be able to accept crypto payments for taxes, fees and services. If thousands are backwatered in paying by credit card, millions of us are deep over our heads on crypto use.

Certainly some people are active in new payment forms that never deal with US currency. The Wall Street Journal reported Saturday that “small investors are piling back into the cryptocurrency market” despite proposed new tax regulations of the market from Washington.

The article points out gently that these investors are not professional investors. There’s no doubt of the popularity of involvement in crypto formats but far less activity by big players.

“There will likely continue to be innovation in both the scaling and fee economics of blockchain, which may well drive competition with traditional payment systems,” professional services giant Deloitte noted in an article this month, but that’s not a reason for companies to jump in now, the firm indicated.

Before getting involved in crypto, Deloitte suggests a series of questions that could determine whether now is the time to be on the cutting edge with crypto and whether government is the place.

In this case, questions would include what the county hopes to achieve by taking crypto payments; what steps the county has taken to be ready to receive, monitor and manage the crypto (remember, you can’t just put this stuff in the bank); whether the county should keep custody of the crypto or outsource custody (and, again, that custodian would not face bank oversight from federal and state governments); and what adjustments the county would have to make “in anticipation of the eventual issuance of digital currencies by central banks.”

Those are the basics. Deloitte lists secondary questions that – to those used to how we function in a society based on a national currency – would require new expertise and record-keeping. 

Government accounting today is straightforward: everything is based on the US dollar. What happens when government has to record and track dozens of different kinds of crypto payments and assets? How do you equate one with another, and how do they all equate to the US dollar? Isn’t it far easier to just do everything in the US dollar?

And how will a mayor and commissioners budget in multiple crypto formats whose values fluctuate widely? It sounds like Europe 100 years ago in postwar inflation where the cost of a loaf of bread could be a million units of a currency higher the next day.

That may be a watershed in generations: some of us heard family horror tales of millions of currency units spent for bread or loss of values in a depression, while younger generations may be comfortable dealing in values that shoot up and down weekly or daily.

We support the study of crypto payments for the county, but with the hope that the county’s financial brain trust carefully assesses what the fallout of crypto operations might be. We want our county to be sound as a dollar far more than we want it to be sound as a crypto.

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