New York City Mayor Eric Adams may be the most recognizable champion of cryptocurrency in New York politics, but he’s hardly the first elected official in the Empire State to extoll the potential benefits of the decentralized virtual banking system and the technology that powers it, blockchain.

Long before Adams started publicly beefing with Miami over which city loves bitcoin more, a handful of state legislators were talking up the technology’s possibilities. In 2017, Assembly Member Clyde Vanel introduced a slate of cryptocurrency and blockchain-related bills, including a bill creating a task force to study how to regulate cryptocurrencies and their potential uses. Vanel, who then posted a video on YouTube touring Bitcoin ATMs at bodegas in his district, and other elected officials continue to tout the economic development benefits of welcoming a burgeoning tech industry. He’s also among the crypto enthusiasts who see the technology as an economic equalizer – a tool not just for the rich to get richer, but for people who have been discriminated against by banking institutions or locked out of investment opportunities, including people of color and low-income communities. “In order to get an account with a traditional bank, you have to be a certain type of investor. You have to have certain kinds of funds,” Vanel said. “With cryptocurrency, the bar to entry into the market is really low.”

Though crypto has its rabid fans, it’s a volatile, speculative phenomenon, and one that has seen a proliferation of scams and thefts as Congress considers how to regulate the industry. Plus, while virtual wallets may provide a way for people who are unbanked to access a system to exchange money, it doesn’t do much to help people who don’t have much excess cash to exchange in the first place.

Tonantzin Carmona, a fellow at the Brookings Institution, has urged mayors across the country to more carefully consider what problems they are attempting to solve with cryptocurrency before embracing it as a solution. “Contrary to what crypto proponents believe, cryptocurrency does not presently make for a good payment option,” Carmona told City & State. “Cryptocurrencies are notoriously volatile, transactions can be slow, they can also be expensive. And unlike cash, cryptocurrencies are still not universally accepted.”

Roughly 301,700 households in New York City are unbanked, according to a 2021 report from the city Department of Consumer and Worker Protection, meaning that they don’t have traditional savings or checking accounts. Those households are concentrated in neighborhoods with higher rates of poverty and ones that are predominately Black and Latino. The unbanked and underbanked are who crypto enthusiasts often refer to when outlining the currency’s benefits. Bitcoin and other virtual currencies can be exchanged through virtual wallets, forgoing the need for an individual to be approved to open a traditional account.

Those wallets have also been touted as a way for immigrant families to send money back to relatives in other countries, as an alternative to traditional money transfer services like Western Union. “To send $100 to Haiti, certain places charge us $10 to $11,” said Vanel, whose parents immigrated from Haiti. “The transaction fees are fractions of what traditional money transfers are,” he said of cryptocurrency. Transaction fees for cryptocurrency can be unpredictable though, with higher fees when the network is processing more transactions.

Cleve Mesidor, executive director of the Blockchain Foundation, said it wasn’t just the unbanked or underbanked who could potentially benefit from cryptocurrency. “The Black community – yes, it’s the unbanked people who never …….

Source: https://www.cityandstateny.com/policy/2022/04/can-cryptocurrency-actually-help-anyone/366031/

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