Brokerdealer.com blog update courtesy of Pete Rizzo from CoinDesk.
Over the past few months, brokerdealer.com has covered the growing trend and interest in the mystery that is the electronic currency, bitcoin. With the anticipation of the Winklevoss twins’ launch of a bitcoin ETF and brokerdealers studying the trade of bitcoins, it is inevitable they will soon become widely accepted in all parts of life. Now a New York City Councilman is proposing that the city accepts bitcoins as a form of payment for fines and fees as a way to save the city more money.
Last Thursday New York City councilman Mark Levine introduced a bill petitioning for the city to accept bitcoin as payment for fines and fees.
Levine opened up about the bill, which he says could be passed as early as June, in a new interview with CoinDesk, indicating that he believes New York City has a pressing incentive to begin accepting the payment method due to its cost advantages when compared to credit cards.
The democrat from the 7th District in northern Manhattan recalls that it was this benefit that led him to introduce the bill, one that will now go through a process of gathering co-sponsors, before heading to a vote with the city’s technology committee and finally a full vote in the city council.
Levine told CoinDesk:
“It started with realizing how much money the city of New York is losing on transaction fees on credit cards, ultimately it’s several million a year because of all sorts of fees and fines.”
Levine added that if the city were to partner with an intermediary in accepting bitcoin, it would bear some costs, but that these would still be less than those charged by payment card providers.
While Levine is optimistic about an expedited timeline for the bill, he indicated that the end-of-June estimate is far from concrete.
“There’s a lot of uncertainty in the process,” he said.
Message to entrepreneurs
Yet another benefit to accepting bitcoin, Levin said, is the message that New York City is an innovator that deserves the attention of entrepreneurs considering Silicon Valley as the hub for their endeavors.
Levine framed New York City as “in competition” with areas like Silicon Valley and Boston when seeking to attract top tech talent, and framed bitcoin as a key differentiator that could provide value to city.
“I think that being the first major city in the US to make this move sends a clear signal that we’re innovators here,” Levine said.
New York has already positioned itself as at the forefront of developments in the bitcoin space, with its introduction of the proposed ‘BitLicense’, the first state-specific bitcoin regulation in the US.
Further, the city was home to the first physical bitcoin center, Bitcoin Center NYC, opened at the start of 2014.
Though excited and optimistic about his proposal, Levine indicated that some of his peers in the New York City council have taken issue with the bill and the idea of accepting bitcoin.
“Some of the reactions I’ve gotten in the last few days are concerns that bitcoin is the ‘Wild West’ of currencies,” he said.
The councilman indicated that he countered such claims as ill-informed, arguing to his colleagues that the city accepts cash, the “ultimate untraceable financial instrument”.
Levine, however, framed the ongoing discussion by the New York State Financial Services Department (NYDFS) over its BitLicense proposal as one that would likely help “calm the nerves” of those in the state government, though he indicated it would not directly affect the outcome of the bill.
For bitcoin community members, he also clarified a provision of the bill that would enable the city to accept fees for bitcoin transactions, arguing that, while the city would be looking to pass on the cost of the transaction to payees, the fee would likely be less than 1%.
Issue of legal tender
Given the uncertain status of bitcoin in the eyes of US courts, there are also questions about whether the city could accept the payment method, given that bitcoin the currency is not considered legal tender in New York state.
Levine indicated, however, that the bill was fully vetted by the city council’s legal team, and that he believes having a financial intermediary accept bitcoin, thereby providing the city with US dollars, would help the city circumvent potential legal issues.
The issue is one that remains murky for the number of proposals introduced in US governments over the last few weeks.
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