- Austin passed two new resolutions late last week, with one directing the city to explore the use of Bitcoin in financial transactions such as tax payments.
- The city also wants to explore the use of blockchain technology, with one city council member revealing that Austin has been looking at the technology for four years.
The race to become America’s ultimate crypto city has continued to heat up as adoption across the U.S surges. Austin has made the latest move, approving two new resolutions that seek to put Bitcoin and blockchain at the heart of the city’s operations.
The first resolution, pushed by city council member MacKenzie Kelly focuses on crypto, directing the Austin city manager to explore possible use cases of crypto for the city’s residents. One of the particular areas of interest is the use of Bitcoin to make payments.
As Kelly told one crypto news outlet, her resolution is mostly about research to determine if the city can benefit from Bitcoin.
This is more of a feasibility study. We currently don’t have enough information as council members to know if we can accept crypto as payment for city services. We need to know more about this before we can decide.
This study will let the city know if it’s feasible to keep Bitcoin on its financial books. One of the considerations will be whether Bitcoin is a currency or an asset, a question that U.S regulators have yet to come to a conclusion about. The SEC has billed some cryptos as securities while the CFTC has taken up enforcement actions against cryptos it said were commodities. Even the IRS has its own view as it demands taxes from crypto owners.
“We don’t know if we can bill it as an asset — that would prevent us from being able to accept crypto as payment. There’s also the financial stability of crypto as a whole, and if we can even accept it in that regard,” Kelly observed.
Related: New York to get its own crypto as the new mayor’s battle with Miami takes shape
Austin wants Bitcoin payments, but are the residents ready?
It’s one thing allowing Bitcoin for payments and a totally different thing for residents to adopt the crypto and use it actively. Ohio was one state that made it possible for residents to pay taxes in Bitcoin but realized several months later that residents weren’t ready (or willing) to part with their Bitcoin. Ohio would later scrap the Bitcoin for taxes option.
While data on the number of Austin residents who own crypto is unclear, the state of Texas has about 8 percent of its residents owning Bitcoin, or about 2.5 million people. A survey by Finder.com projects that this will almost double to 14 percent this year. Austin is home to the biggest number of Bitcoin owners in the state.
According to Kelly, who pushed the bill, Bitcoin could come in handy for those that lack other means of payment but own Bitcoin. She commented:
If someone gets a speeding ticket, for example, and doesn’t have a bank account but has cryptocurrency, they could use crypto as payment. Or, if they wanted to pay their taxes or electric bills using Bitcoin or dedicate a park in their name using crypto. This is all part of the analysis for allowing the city of Austin to accept crypto payments.
While having the option to pay for speeding tickets in Bitcoin will be welcome by the crypto community, it’s unlikely that it will be a big hit. For most, Bitcoin is an investment, not a currency for day-to-day transactions. BTC’s prohibitive fees also pose a hindrance to its adoption as a currency.
In addition, the U.S has one of the highest financial inclusion rates globally, with only about 5 percent of U.S adults reporting to have no checking or savings account.
Aside from the crypto payments resolution, the city council members also passed a resolution by Austin Mayor Steve Adler focusing on adopting blockchain technology. And while crypto payments may be a few years away, blockchain technology could be integrated immediately. Not only can it enhance efficiency and increase transparency, but blockchain can also slash operating costs for the city.
Austin has already been exploring blockchain technology, one council member revealed during the March 24 session. Sabino Renteria said that the city has been looking to the technology for four years now, with the first project focusing on the city’s homeless population and how best they can control their data.
There are concerns
While most city council members want crypto and blockchain, there are some who expressed concerns. Leslie Pool said that she has concerns over the application of the technology, even as she expressed cautious optimism.
It may be tamper evident and tamper resistant, but that is all that it is. It’s a digital ledger. So there may be some unique uses for this or for the city to promote its use, but at this point, given its relatively recent entry into data storage or other digital arenas, I’m really cautious relating to the city diving into adopting or using it.
Leslie is even more concerned about Bitcoin payments.
“I continue to believe crypto is too volatile, a form of currency to risk taxpayer dollars or employee retirements. Crypto is unregulated. It’s not just unregulated. It’s also unprotected. There’s an element for me of gaming involved here. That leaves me really uneasy,” she stated.
According to the councilwoman, using crypto for payments of any kind is inconsistent with the role of the city council in safeguarding the municipality’s revenue.
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