Cryptocurrency team looks at broad county opportunities
The Miami-Dade Cryptocurrency Task Force is up, running and already exploring the feasibility for the county to start accepting cryptocurrencies and other digital monetary forms as acceptable methods of payment countywide for taxes, fees and services.
The group is also studying whether the county could make payments with that exchange and is looking for opportunities to use blockchain technology in other areas.
Commissioners’ appointees held their first meeting Sept. 15 and are set to report within 180 days, laying out the benefits and risks for the county. Commissioners are then to decide whether they are willing to use cryptocurrencies in the county.
Task force members agree that for upcoming meetings, they are to explore what has been done in other municipalities, surveys county residents to evaluate their interest in cryptocurrency, look for vendors that could provide transaction and custodian services to the county, and work on recommendations of best practices.
There is a consensus that the group wants to present a report with the sole purpose of serving county residents’ interests. Although they are still in early conversations, they are taking one step at a time to avoid violating regulations already in place in the county.
One of the main concerns of Bitcoin users is the volatility of the exchange. For instance, just on Sept. 7 Bitcoin and Ether prices fell 17%, the same day El Salvador adopted the crypto as legal tender.
Andrew Carey Barnard Jr., CEO and co-founder of Bitstop and a member appointed by commissioner Kionne McGhee, explained to Miami Today that Bitcoin has proven to be volatile in the short term. “However, if you look at Bitcoin, historically, it’s pretty much gone up 200% year over year, so it’s actually pretty good storage of value long term,” he said.
Task force experts agree that they are to consider all possibilities for the county. One possibility is reaching out to business entities that serve as third parties between the user and the county. They would accept the Bitcoin paid to the county, exchange it for US dollars, and give it to the county in the form of the fiat currency.
Another option is that the county would accept Bitcoin and offload some of the risks by converting the money to US dollars and, depending on the risk they are willing to take, only keep a small percentage of the Bitcoin they receive.
The first item on the group’s agenda is doing at least two surveys. One would ask Miami-Dade residents if they know what Bitcoin is, if they understand it, and if they are interested in using it as a method of payment to government offices. A second survey would go to county commissioners, as they are in a position to have the pulse and temperature of their constituencies, to help task force members understand their motivations with cryptocurrency.
Daniel Stabile, a partner in the Miami office of Shutts & Bowen LLP, nominated by Commissioner Sally Heyman and appointed vice chairman of the task force, told Miami Today that some of the benefit he sees in the use of cryptocurrency in the county is that some people already hold the virtual currency, and rather than paying a third party a fee to convert it to US dollars they could directly pay the county for its services.
Also, Mr. Stabile considers that if the county starts accepting cryptocurrency, it could attract people to the county; it can help educate the population on what the virtual currency is and how risky it is.
“I was delighted to see that unanimously task force members at our first meeting were articulating the very same idea that the most important thing here is that if we’re going to do this, we’re doing it in a way that serves the people of Miami-Dade County.”
Mr. Barnard also sees cryptocurrencies as another alternative of payment. “Right now, they accept different credit cards, they accept checks, and adding Bitcoin to that is just adding one more payment,” he said. “It’s just increasing the accessibility of being able to pay for goods and services and taxes to the county.”
He also said that some people don’t even have credit cards, so this might be “a good option for those people that don’t have any credit cards at all.”
For the county, Mr. Barnard said, it could be an opportunity to decrease costs in conventional methods of payments, since merchants charge a processing fee. “The Bitcoin payment processor might be a cheaper option for the county and it may be more of an incentive to allow people to pay in Bitcoin, because it may be cheaper in terms of the merchant fees that the county accepts.”
Additionally, Mr. Barnard said, if the county chooses to hold any of the Bitcoin that it accepts as payments, that would be a hedge on its balance sheet. “With growing inflation within our economy, Bitcoin has demonstrated that it acts as a hedge, as an uncorrelated asset with respect to holding it on the balance sheet.” Some companies such as MicroStrategy and Tesla already have Bitcoin on their balance sheets.
At upcoming meetings, the task force is to explore which company could be custodian of the virtual currency for the county to avoid cyber-attacks.
“Bitcoin, which is the dominant blockchain, is extremely secure, it’s never been hacked,” said Mr. Stabile. “Now, companies and businesses that may be storing Bitcoin or virtual currency, there have been hacks of those entities.”
“But there are fantastic companies that are out there that have never been hacked, so we will do everything we can to make sure that we’re sort of best in class in terms of our own cybersecurity,” Mr. Stabile said.
Mr. Barnard highlighted the importance of carefully following the county’s procurement process when selecting vendors the task force is to recommend. “There have been some other counties around the nation that have tried this before, and they did not follow their procurement laws when choosing a vendor properly, which made the process very difficult to implement.”
Also, Mr. Barnard said, the task force is to work closely with county lawyers to ensure all laws and rules are followed and determine what could be done with cryptocurrency being accepted.
Mr. Stabile explained that one of the group’s most challenging tasks may be to see how cryptocurrency would be integrated into the legal system. Currently, some virtual currencies are considered securities and they’re regulated by the Securities and Exchange Commission, and some are considered commodities and they’re regulated by the Commodities Futures Trading Commission.
“I think one of the biggest challenges that we have in the regulatory environment is the laws and regulations are not harmonized, so it’s challenging to figure out what the laws are,” Mr. Stabile said. “It’s costly, it’s complex.”
Nonetheless, he said, there are already efforts by people with influence in the regulatory environment. “Just last week, there was a conference of state banking supervisors and they put forth a proposed uniform law, which is sort of designed to get all of the states on the same page,” Mr. Stabile said. “I think people are aware of the problem and over time, the regulatory environment will mature and the rules will become clearer.”
The Miami-Dade Cryptocurrency Task Force was created in April by a resolution sponsored by Commissioner Danielle Cohen Higgins. Similar task forces have been created at state and local levels. In 2019, the Legislature established the Florida Blockchain Task Force to study how state, county, and municipal governments can benefit from blockchain payments.
The City of Miami already launched its own cryptocurrency, the Miami Coin. Some businesses in New York, Los Angeles and San Francisco already accept this type of payment.