When Eric Adams, the next mayor of New York City, triumphantly flew down to a political conference in Puerto Rico last month, he told reporters he had paid for his trip there. “I paid my own way. I learned the best way to tell people to mind their business is to come out your pocket and cut your own check, so I’m here on my time,” Adams said at the SOMOS conference, hosted by a nonprofit benefiting the Latino community. “It’s on my dollar, my dime, and my time.” Adams left out that he had not traveled on a commercial airliner. Instead, he flew on a private jet belonging to Brock Pierce, a former child actor who is now a wealthy cryptocurrency entrepreneur. The Adams campaign said Adams had paid for the flight, but declined to provide proof.
The news that Adams, a booster of big business, was traveling on a jet owned by a cryptocurrency heavyweight was not a surprise for those who have been paying attention to him. Adams, a Democrat, has already said he’d take his first three paychecks in Bitcoin, and has called for cryptocurrency to be taught in schools. Along with the mayor of Miami, Francis Suarez, Adams has emerged as a prominent champion for a nascent industry that is awash with cash and drawing fresh scrutiny from regulators. “When you hear Eric Adams talk about cryptocurrency, what he’s talking about is trying to impart an enthusiasm for emerging technologies, to think of New York as a home and to encourage investors and technologists to understand that they have a partner with the city,” says Andrew Rasiej, a top member of the Adams transition team focusing on technology. “A lot of people are talking about having a deputy mayor for technology. The good news is we already have a mayor for technology.”
Adams, the Brooklyn borough president and a former police captain, is one of the more intriguing and unpredictable mayors-to-be in modern times. He narrowly won a crowded Democratic primary with the support of outer-borough, working-class New York. At the same time, he unabashedly courted real estate and Wall Street elites, taking large campaign donations from some of the wealthiest and most powerful men in the world. Rupert Murdoch, Michael Bloomberg, and Bill de Blasio all count themselves as enthusiastic Adams backers. De Blasio forged a close alliance with the city’s largest real estate developers but kept a chilly distance from power brokers in the worlds of tech and finance. Adams, a regular at tony Manhattan nightclubs, has signaled that he will be much more accommodating. Unlike de Blasio, Adams has openly picked fights with the left flank of the Democratic Party.
Cryptocurrency fits this Adams brand. The most well-known and valuable currency, Bitcoin, is barely more than a decade old, and has surged in value since early 2020. One Bitcoin is now worth tens of thousands of U.S. dollars. Once devoid of significant value, Bitcoin has made a number of traders and investors inordinately wealthy in a short amount of time. The pricing of the coin and other digital currencies, like Ethereum, is incredibly volatile; it is not uncommon for digital coins to gain and lose value rapidly over the course of a day. (Disclosure: I own small amounts of cryptocurrency.) Unlike an ordinary bank transaction, cryptocurrency transactions are incredibly difficult to track. There is no central bank or single administrator. Currency is sent individually on a peer-to-peer network and transactions are verified digitally in a ledger called blockchain. The anonymity can breed illegality, with international crime cartels turning to Bitcoin to launder cash.
Some crypto enthusiasts champion the coins as a way to build toward a radical libertarian future, beyond the reach of banking regulators, but more and more investors now talk up the potential for digital currencies to be used in ordinary transactions, like dollars on a debit card. Other boosters see cryptocurrency as a worthy investment vehicle, like digital gold, and a hedge against rising inflation. Large financial firms have dramatically increased their crypto investments over the past two years, ever since the price of Bitcoin surged around the beginning of the pandemic. “The analogy would be to a credit card payment system. You’d have a Bitcoin payment system,” says Joseph Trevisani, a senior analyst focusing on currency and economics at FXStreet. “Does that involve infrastructure, jobs, firms operating here, and links to the rest of the financial world? Would that create jobs here? Without question.”
Ultimately, cryptocurrency remains a speculative vehicle. The coins are data kept in a secure online ledger and do not exist in any physical form, unlike paper money. They gain value based on investment and belief. The currencies have intrinsic value because people with billions of dollars believe they do. New York City itself is home to a number of firms that trade in cryptocurrencies, but it’s the poorer, upstate regions where Bitcoin operations have begun to take over. The act of mining, or creating, Bitcoin—a highly complex computer process that creates a cryptographic system that generates new Bitcoin and facilitates transactions—is incredibly energy-intensive. Thousands of electricity-guzzling servers are required; to meet its carbon-reduction goals, China banned the practice, sending several miners to New York and other states. Former industrial hubs in upstate and western New York have grown attractive to Bitcoin miners because electricity and land are cheap, even as environmental groups decry the activity and call for a ban on the practice.
Given the lack of space and the enormous energy costs, the five boroughs are unlikely to be a hub of Bitcoin mining anytime soon. In fact, there is relatively little Adams himself can do, as mayor of New York City, to directly grow the cryptocurrency industry. State government, not the municipality, regulates most financial activity. New York State is one of the strictest regulators of cryptocurrency in America, requiring firms that participate in the industry to obtain a so-called Bitlicense from the State Department of Financial Services. Akin to banking licenses, Bitlicenses require financial disclosure and anti-money-laundering and cybersecurity compliance, among other stipulations. Roughly 30 companies have won a license or charter since the introduction of the rules, in 2015.
It’s entirely unclear what policy changes Adams will seek on the cryptocurrency front. His spokesman did not return a request for comment, and he has declined to elaborate further on his plans. Municipal workers must accept payments in U.S. dollars, not cryptocurrency, and it would be an exceedingly challenging endeavor to overhaul a payment-processing system for hundreds of thousands of employees. Getting more private businesses to accept cryptocurrency could be another goal, but few people are likely to abandon credit and debit cards carrying U.S. dollars for a fluctuating digital currency. “The mayor can work to change laws to get the city to accept payments for some transactions in crypto. That they can do without state approval,” says John Kaehny, executive director of Reinvent Albany, a good government group. “There’s an opportunity cost to everything government does. You have smart people with limited time and you’re thinking about how to shoehorn the city’s activities so they can use crypto … it’s stupid.”
Another question, also unresolved, is whether Adams himself owns Bitcoin, or any other cryptocurrency. His campaign declined to answer a Voice inquiry, and he has not indicated publicly if he has bought or traded cryptocurrency. As mayor of New York City, he could have direct influence over the price of Bitcoin if he becomes a frequent enough booster. The billionaire Elon Musk has moved cryptocurrency markets through tweets alone. Adams could decide, like Suarez in Miami, to create New York City’s own coin. In November, the Miami mayor announced that he would be converting the millions of dollars in proceeds that MiamiCoin has created into a Bitcoin “dividend,” potentially sending money in newly created digital wallets to city residents. One avenue of interest for crypto enthusiasts—and one potential area for both risk and reward for city workers—is pension fund investment. Adams cannot directly decide how the city pension funds invest, but he could wield his bully pulpit to influence the decisions unions make. New Jersey’s Common Pension Fund D has small holdings in blockchain and digital holding companies, while two pension plans in Fairfax, Virginia, have invested in crypto assets.
The incoming mayor’s embrace of cryptocurrency is perceived, at the bare minimum, as a symbolic gesture. De Blasio was never as anti-tech as his reputation suggested—he once teamed up with Andrew Cuomo to land the taxpayer-subsidized Amazon headquarters in Queens—but he was never going to be openly friendly or inviting to the millionaires and billionaires seeking a certain amount of accommodation and ego-gratification. Tech companies did continue to expand in New York under de Blasio: Facebook last year agreed to lease nearly all the space in the James A. Farley Building, in Midtown. Supporters of the cryptocurrency industry hope, in the long-term, that Adams could seek to boost firms with tax breaks on par with those Amazon would have received, had their headquarters been planted in the city. But the grassroots backlash was fierce, especially since Amazon is a trillion-dollar company in no need of government largesse. It was also never clear that Amazon could hit its lofty job targets. And the nascent crypto industry is not yet a robust employer.
Business in the five boroughs will likely continue apace, no matter what Adams does. And for a city still struggling to recover tourism dollars lost during the pandemic and address myriad other challenges—homelessness, gun violence, unemployment—it’s unclear how much it really matters whether New York becomes America’s cryptocurrency capital. “If you look at New York’s employment problems, it’s how to employ a lot of semi-skilled and unskilled people and address income inequality,” says Kaehny. “Crypto is such a non-answer.” ❖