Our country is dealing with some of the highest inflation in a generation while COVID jitters and government restrictions shake the economy. But state and local policymakers are not powerless to protect their residents. There is always Bitcoin.
In a time of inflation, ballooning government debts, and broader financial uncertainty, a Bitcoin-first policy would be a welcome message.
The main advantage of Bitcoin, apart from being an alternative to the monetary manipulation of Washington, is that it is digital cash based on a decentralized and transparent public ledger that must be verified by thousands of independent nodes, or computers. It is forever limited to just 21 million units, and it can be sent to anyone around the world who has a wallet address.
Miami Mayor Francis Suarez is one of the most prominent Bitcoin-loving public officials. He has pledged to make Miami a “Bitcoin City” and already receives 100 percent of his paycheck in Bitcoin. He has joined forces with Scott Conger, mayor of Jackson, Tenn., in finding an option to pay city workers in Bitcoin as well.
For his part, Florida Gov. Ron DeSantis has made the boldest move of all, including cryptocurrency payment of state fees as a multi-department pilot project in his 2022 budget.
If East Coast mayors and governors can hop on the Bitcoin train, why not everywhere?
State lawmakers could pass legislation allowing treasurers to hold Bitcoin on the state’s balance sheet. That authorization could also allow local governments to follow suit.
Lawmakers could also welcome Bitcoin mining, as Texas has already done. Mining is the process of unlocking new blocks of Bitcoin by using computing hash power to solve complex algorithms. Some states already provide a sales tax exemption for data centers. That exemption could be broadened to also benefit Bitcoin miners.
As Jesse Colzani has pointed out, rural areas of the world with low energy costs have the biggest economic advantage in Bitcoin mining. Mining computers only need a reliable internet connection, a cool environment, and access to stable power. Welcoming miners would increase investment in facilities, jobs, and help return dividends to local and state coffers. By making it easier for price and energy-conscious Bitcoin miners to relocate, it could help spur a new energy revolution that would dwarf that of hydroelectricity or natural gas.
At present, some states offer financial service companies licenses via the Nationwide Multistate Licensing System & Registry. For Bitcoin specifically, this means registered brokers, or “money transmitters”, can apply for licenses in multiple states that are honored in others. That is a great first step, but it should be even easier.
By offering full reciprocity of money transmitter licenses, any state could ensure that Bitcoin firms could set up shop without hassle in a big city or small town alike. That would be similar to the reciprocity of occupational licenses, which reduce barriers to work and make it easier for qualified individuals to work anywhere. Let’s do the same for the money of the future.
The quick-moving technology of the crypto space is numbing at times, but the role of government is to set clear and easy guidelines for entrepreneurs and citizens.
By opening itself to Bitcoin and the broader cryptocurrency space, states like Texas, North Carolina, or Idaho would have an advantage over the highly regulated financial markets based in New York or California. Low taxes coupled with a light-touch regulatory environment and openness to entrepreneurship would be key to this evolution.
While there are vast philosophical questions invoked by the role of digital assets, the advantage of giving more choice to state residents cannot be overstated. It is a real alternative.
By instituting pilot projects to let citizens offer bitcoin as payment for state fees or keeping it on state balance sheets, giving crypto options for state employees, and easing the regulatory burdens faced by crypto entrepreneurs, states have the opportunity to ensure their residents are ready for the digital age, to the moon and beyond.