AustinCoin? Council Considering Crypto

Some City Council members want to look into cryptocurrency as a way to pay taxes, city bills

Austin City Hall (Photo by John Anderson)

Mayor Steve Adler and Council Member Mackenzie Kelly are bringing two resolutions to the Council meeting today, March 24, asking staff to explore the potential use of blockchain and cryptocurrency technologies for a variety of official city of Austin uses. The proposals, which were posted on the Council message board two weeks ago, have been met with skepticism among members of the Austin community that have not already bought into the crypto/blockchain/Web3 hype – including from the local tech community.

"It is not technophobic to be concerned about these proposals," Courtney Rosenthal, an Austin-based software engineer and tech blogger, wrote in a recent post. "Many technology experts are skeptical of blockchain and cryptocurrencies. The exuberant support for them tends to come from people who have a vested interest in crypto." In the post, Rosenthal homed in on three of her biggest concerns surrounding the technologies: environmental impact, the speculative nature of cryptocurrencies, and the lack of a central authority regulating either technology.

Rosenthal's skepticism is shared by several council mem­bers who voiced their concerns at Tuesday's work session, March 22. "At this point, given its relatively recent entry into [the tech sector] I am really cautious about the city adopting or using it," CM Leslie Pool said in reference to Adler's blockchain resolution, though she was equally concerned about the city lending its imprimatur to cryptocurrencies. "I'm concerned about this trusted institution, which is the city of Austin, leaping ahead to adopt a new technology" that even recent municipal backers, like the city of Miami, are backing off on. In February, just five months after Miami adopted a cryptocurrency, the price of MiamiCoin had dropped nearly 93% from its peak price of 6 cents a coin.

Both resolutions are purely exploratory in nature, a point emphasized by both Adler and Kelly in response to pushback from their colleagues. The most recent draft of Adler's resolution directs staff to "create an environment within city government and in the community generally that supports the creation and development of new technologies," including Web3 and blockchain technologies. Specific applications include, but are not limited to: arts and music, "municipal governance and functions," and identity verification. Recent changes to the resolution, which appear to be in response to community pushback, direct staff to explore the use of public payment platforms and public banking as well.

Kelly's crypto resolution would have staff explore the use of cryptocurrencies, perhaps an AustinCoin, as a way to pay for "municipal taxes, fees, and penalties" and improve the delivery of municipal services, as well as what it would take to allow the city to accept donations in the form of crypto. "I pushed back at some of the people in the community that are trying at this point to turn it into a debate about ... adopting these technologies for particular uses," Adler said during the work session. "Before we should ever consider doing anything like that, [we need] more research, and that's all [these resolutions] do."

In response, Mayor Pro Tem Alison Alter pointed out that research has already shown the technologies to be wildly speculative and a huge strain on the environment (operation of the current crypto market requires the equivalent of 19 coal plants operating continuously, according to the U.S. Energy Star program). "I'm not really sure that I need a fact-finding study to tell me there's a lot of financial risk or that there's environmental implications of using this [as a financial payment system]," Alter said of the resolutions.

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