What digital money can do for cities

On a recent virtual roundtable organised by Ignite Cities and the National League of Cities, mayors from Los Angeles, Miami and Columbia outlined why their cities are becoming early adopters of cryptocurrencies and digital payments.

Miami Mayor Francis Suarez is well known for his enthusiasm to make the city a cryptocurrency and tech hub. Miami recently became the launch city for CityCoins, a programmable crypto token which generates Stacks (STX) coins and Bitcoin for holders while giving funds to the city’s treasury.

Suarez revealed that within two weeks of the launch, MiamiCoin had already generated an eye-popping US$2 million and counting which could go to the city’s general fund. The token was launched independently by CityCoins and the Miami government is carrying out due diligence on mechanisms by which it could accept the donation.

Suarez said it’s possible that the initiative “could generate enough money to pay off our entire debt”.

Miami is also exploring allowing staff to be paid in Bitcoin, accepting payments and taxes from residents in cryptocurrency and experimenting with use cases on the Ethereum blockchain in areas such as procurement and records management.

Onlookers may be intrigued but cautious about these new and uncertain areas for local government, but Suarez said: “As cities that are in the most disruptive time in the history of humanity and the rate of disruption is accelerating almost exponentially, you have two choices: you can either embrace that disruption and try to get ahead of it, or you can wither away and suffer the consequences of not getting involved.”

He said cities have historically been the David to Silicon Valley’s Goliath. “I wanted to go out there and take a chance on a risk, like happens in the private sector. Except that for me, I felt that the risk was something that would benefit generations of Miamians through creating a tech economy that creates high-paying jobs.”

Angeleno Account

Los Angeles Mayor Eric Garcetti outlined how the city Is building on its Angeleno Card initiative which provided cash assistance via prepaid debit cards to over 100,000 of the most in-need residents during the pandemic.

Garcetti said: “We were able to give direct help to folks and then track anonymously, not by name, where those purchases went. This showed us not only a breakthrough in technology, but also a breakthrough in policymaking.”

He said the “lies and cliches” about how poorer people would spend the money were disproved, with data suggesting most of the cash went on basic necessities.

Based on this and inspired by cities such as Stockton and others, LA is launching one of the largest guaranteed income pilots in the US. The Angeleno Account initiative will also expand uses for the cards further.

Garcetti said the card can help to build a “relationship” with residents.

“We are now pouring everything into that so that people can use it as a library card, hopefully soon as their bus and train card, as their banking card, or to pay off a parking ticket,” Garcetti said.

The account will also help residents to find out about benefits and programmes they could be eligible for, such as income tax credits, after-school programmes or gang intervention and domestic violence prevention programmes.

Garcetti said the Angeleno Card helps address three key gaps exposed by the pandemic: the digital divide, the banking divide, and the information divide.

The City of Columbia, South Carolina is also launching a guaranteed income pilot via prepaid cards. The programme is focused on how a guaranteed income of US$500 a month for a year could help households stabilise their finances and also increase “the ties that bind” between fathers and their children.

“I expect in a year’s time, we’re going to see some data that encourages all of us to continue to move in this direction,” said Steve Benjamin, Mayor of Columbia.

Communication

Even in technology circles, Bitcoin, blockchain, tokens and other terms can leave people baffled.

Garcetti said that as these new technologies come to the fore, cities have a responsibility to help residents understand them, interpreting technological complexity and explaining it in plain language, as well as driving financial literacy.

George Burciaga, Managing Partner at consulting company Ignite Cities, which works with all three mayors, said: “It’s incredible how the last 18 months have forced government to become nimble, flexible and agile.”

He said that digital payments “have accelerated access to cash across cities in order to rapidly distribute federal payments on a recurring basis, supplying better controls and metrics to ensure everyone has the ability to maintain during this pandemic”.

“Cryptocurrency is another great example of rethinking how cities across the world will build profitability while also allowing equal opportunity to invest,” Burciaga added.

Replay the event: