Miami started paying salaries with Bitcoin to whoever they wanted: six months later it’s still a disaster
The plan of Francis Suárez, the extrovert mayor of Miami, is to turn the city of Florida into one of the great capitals of Bitcoin. In recent months there have been many movements and there has been the Bitcoin Conference 2021, the great global conference on cryptocurrencies. But far from the flashes and the promised plans the implementation of some measures related to Bitcoin is not being easy.
In February of this year, the mayor of Miami announced that the city would start paying part of the salary in bitcoins in addition to dollars and even allowing to pay taxes with this cryptocurrency. An initiative that for now, six months later, is having far-reaching results than expected: with multiple legal problems and criticisms of those who should take advantage of this option.
Own cryptocurrency and tax incentives, but without guarantees
“Eliminate homelessness” or even “increase the police force” are some of the things that the mayor of Miami has promised that will be achieved with the creation of the MiamiCoin, the city’s own cryptocurrency and one of Suárez’s obsessions. An initiative with which the city council would have managed to raise the equivalent of about 7 million dollars, according to the Washington Post.
MiamiCoin is based on the Bitcoin blockchain, a cryptocurrency with which the city council has begun to pay the salaries of users who sign up for this measure. It’s been six months since it was announced and, according to internal documents obtained by Motherboard, the plan is not working well.
Through emails, presentations and public reports, different official organizations in Miami have expressed different problems with the possibility of paying salaries in bitcoins.
In an April report it is stated that no cities were found that worked with companies that pay their employees with Bitcoin and pointed out some doubts about this matter, pointing out that workers had to convert these cryptocurrencies into dollars to pay the respective taxes, as opposed to the mayor of Miami’s plan.
“Once an employee receives Bitcoin, it is not insured by the government like American bank deposits. This means that Bitcoin does not have the same protections as money in a bank account“says the report.
Additionally, the report points to the Bitcoin volatility, stating that it is “it is conceivable that an employee’s salary paid on Friday could lose a significant amount of value on Saturday.”
Another problem is that the city council cannot guarantee that providers are giving it the best exchange rates and that there is not a sufficient solution established for managing payroll directly with cryptocurrencies. Logistical problems that the city technicians point out in their report.
At the moment … payment in bitcoins is still a subsequent conversion
In summary, the position of the city’s technicians is that while there are options to convert these payments into cryptocurrencies, there are no stable, large-scale options to pay directly in bitcoins. Given these difficulties, the technicians explained that they could not implement these payments.
One of Miami’s contracts was with the BitPay company, but there is no formal contract. “The company was selected, but the service was never used,” Motherboard describes. Finally, an agreement was established with BitPay, but as a link to convert bitcoins into dollars and vice versa. Not as legal tender, since the city lawyers understood that it does not have this validity in the United States.
Despite acknowledging these risks, with emails and reports that have been maintained until the end of September, the city of Miami continues looking to escape from taking responsibility. As one of these reports describes, Miami “will assume absolutely no responsibility, risk or cost (administrative or otherwise) for the implementation and operation of the service. […] and will not provide any funding or financial support. “
Miami’s plan was to pay in bitcoins and allow to pay taxes in cryptocurrencies, but for the moment the implementation does not go beyond offering an optional service to the different employees so that they can convert the dollars of their salary that they want.
Vía | MotherBoard