New York City’s new mayor Eric Adams plans to convert his first paycheck this week into two cryptocurrencies, which he has been hyping as a potential economic engine for the city.
The Democrat’s office announced on Thursday that Adams’ first salary payment will be deposited with Coinbase, an online exchange used for buying cryptocurrency, and then converted into Ethereum and Bitcoin.
“New York is the center of the world, and we want it to be the center of cryptocurrency and other financial innovations,” Adams said in a statement.
“Being on the forefront of such innovation will help us create jobs, improve our economy, and continue to be a magnet for talent from all over the globe”.
The city noted in its news release that federal labour rules bar the city from paying employees in cryptocurrency, but that any worker paid in US dollars can use an exchange to buy cryptocurrency.
Adams facing criticism over crypto
Adams’ use of his public office to promote the crypto industry drew criticism from at least one upstate New York environmental group, Seneca Lake Guardian, which noted that creating and managing cryptocurrency can consume enormous amounts of energy, often produced by power plants that contribute to climate change.
“Mayor Adams is dead wrong and his ignorance could cost New Yorkers millions of dollars in energy bills while killing local economies, poisoning our water and filling our air with deadly C02 emissions,” the group said in a statement.
State Attorney General Letitia James has investigated cryptocurrency trading platforms and warned last year that investors “should proceed with extreme caution when investing in virtual currencies”.
“Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,” James said.
Adams has suggested that cryptocurrency and blockchain technology, a digital ledger where virtual currency transactions are recorded, should be taught in schools.
Decentralised currencies which uses encryption technology to track transactions, cryptos aren’t backed by governments, a central bank, interest rates, or a long history of exchange rates against other currencies. That can make it difficult to assess their value.
Investors rely on market-driven changes in the value of cryptocurrency to make a profit.
‘I lost thousands of dollars in the stock market’
When asked in November whether it would be a bad economic strategy and conflict of interest for the mayor, Adams told CNN that he was “using [his] personal money. I lost thousands of dollars in the stock market during the stock market crash in my retirement fund. Volatility is part of some of the investments that we make”.
In November, Adams flew to a political conference in Puerto Rico on the private jet of Brock Pierce, a former child actor, and a cryptocurrency entrepreneur.
A spokesperson for Adams at the time told The New York Post that Adams paid for the ride through a travel agent.
New York City Comptroller Brad Lander, whose office oversees public pension funds, said the city’s retirement systems have no plans to invest in digital currencies.
“We have concerns about both the volatility and energy consumption of cryptocurrencies and will continue to watch developments in the cryptocurrency industry closely,” said Shaquana Chaneyfield, a spokesperson for Lander.
David Yermack, the chair of the finance department at New York University’s Stern School of Business, said the announcement was “little more than a publicity stunt”.
“It’s no different than taking the proceeds of his regular paycheck and just buying Bitcoin for himself,” Yermack said in an email.
While the US government and many states have been wary of cryptocurrency, a small number of cities and local officials have embraced it.
Miami Mayor Francis Suarez, a Republican, has been converting his salary to Bitcoin and tried to position his city as the hub of the cryptocurrency industry.
Suarez, a friend of Adams, said in a speech this month as the new president of the U.S. Conference of Mayors that cities need to embrace the industry, and he asked mayors “to sign on to a mayoral crypto compact”.
Suarez told The Associated Press in an interview in November that Adams’ embrace of cryptocurrency shows he understands “cities have to be on the forefront of innovation”.
A former tax collector for Seminole County, Florida, set up systems to accept cryptocurrency for property taxes payments and other fees, though no payments were ever accepted.