How feasible is Adams' plan to turn New York into a cryptocurrency capital and how it will affect the city

Newly elected mayor Eric Adams has received little praise from techies and a little scorn from economists. The Mayor has put Bitcoin at the top of his agenda in recent weeks, reports NY Daily News.

Adams who wants to turn New York into cryptocurrency center, expressed his desire to receive his first salary as mayor in bitcoin. He plans to make cryptographic checks one of the payment options for all municipal employees.

The promises and plans of the new mayor

Adams said at an important business conference on November 17 in Brooklyn, "We're going to turn New York into a laboratory."

But kriptovalyuta Is a hazy frontier in the financial world, and Adams will have to consider the tangled knots of problems. Even analysts who have followed Bitcoin closely say the currency, which is technically defined as a commodity by regulators, can be difficult to understand.

“Cryptocurrency is a lottery ticket,” said Jeffrey Neuburger, a cryptocurrency partner at Proskauer Rose LLP. According to him, no one knows what will happen, what is the future of cryptocurrency.

Adams, who calls himself a computer pro, will face limitations in his ability to make policy on Bitcoin and other cryptocurrencies.

The State of New York operates BitLicense, a system that companies use to store and sell virtual currencies. Efforts to improve regulation are growing at the federal level. New York is currently considered one of the most challenging states to set up a cryptocurrency business.

“He will definitely have the ability to try to influence legislators,” said Gary DeVaul, special advisor to Katten Muchin Rosenman LLP and a former lawyer with the Commodity Futures Trading Commission. "But he cannot change the legal framework around cryptocurrency."

Paying salaries in bitcoin is a bad idea

Bitcoin has been publicly traded since 2010, it is created by computers using complex mathematical problems. The world's first and largest cryptocurrency is not widely used for transactions - exchanges are slow. But investors see it as a store of value that could provide protection against rapid inflation.

The bitcoin price has skyrocketed, having increased by over 200% over the past 12 months. But the cryptocurrency is experiencing strong volatility. And analysts say its downturns make it unusable as a paycheck. This week alone, the value of bitcoin has dropped more than 10%.

Ed Moya, senior market analyst at Oanda, said Adams "was right to support the transformation into a hub by capitalizing on this growing market." Moya also added that allowing urban workers to receive their wages in bitcoin would be a "huge mistake."

The city's payroll options appear to prevent Adams from sending cryptocurrency to workers' wallets after he swears in office on January 1, but he urged the committee to look into virtual currencies.

Environmental issues of bitcoin

Volatility is not the only problem with Bitcoin. Ecologists sounded the alarm over the amount of electricity used to create bitcoin. (Other cryptocurrencies do not use this amount of energy.) And experts are worried about the links between cryptocurrency and illegal transactions, as well as horrific stories of fraud.

Moya said he is concerned that newcomers to finance "don't buy The Wall Street Journal or the Daily News, just get news from Facebook." He believes that newbies can be scammed and lose money on virtual currencies.

On November 17, Adams promoted his crypto commentary as a democratizing force. He stated that his promise on Twitter to receive a salary in bitcoin - even if it was empty - reached young people in the city center.

Paul Krugman, an economist and columnist for the New York Times, wrote that bitcoin is a "giant bubble." Krugman was critical of Adams' message. In his own post, Krugman replied, "We are doomed."

Neuburger, who said he was pleased with Adams' “crypto-friendly” message, nevertheless noted that some of the mayor-elect's remarks oversimplified the topic.

“If he has serious plans, he will have to sort out various issues,” said Neuburger. He believes that Adams will need to focus on the details.