New York City Comptroller Brad Lander has harshly criticized Mayor Eric Adams' proposal to issue Bitcoin-backed municipal bonds, warning that this move would introduce financial risks and undermine investor confidence.
In a statement on May 29, Lander made it clear that he would not allow the city to issue such cryptocurrency-linked debt instruments during his tenure. Lander's office is jointly responsible for debt issuance matters with the Mayor's Office of Management and Budget.
"The stability of cryptocurrency is insufficient to support our city's infrastructure, affordable housing, or school construction," Lander said, adding that the proposal would put New York City "at new risks and erode the trust of bond buyers."
According to Bloomberg, Lander is also a potential mayoral candidate, planning to run as a Democrat in the November elections, while Adams is seeking re-election as an independent candidate.
Adams announced the plan to launch Bitcoin-backed municipal bonds (Bitbond) at the Bitcoin 2025 conference in Las Vegas, Nevada, on May 28. He also reiterated his call to abolish New York State's BitLicense program.
"I believe we need to launch Bitbond, and I will push and work to make Bitbond a reality in New York so that you can make the same bond investments in New York City," Adams told the audience at the conference.
According to a policy brief released in March by the Bitcoin lobbying group Bitcoin Policy Institute, the potential model for Bitbond offers bondholders a 1% annual interest rate over 10 years, with an additional share of the gains from the increase in Bitcoin's price at maturity.
The document also suggests that 90% of the raised funds be used for government spending, with the remaining 10% allocated to purchasing Bitcoin as a strategic reserve.
Lander's statement also included a simulated model of the potential structure of the bonds. According to the document, investors would receive a 100% return if Bitcoin's price rises to a compound annual growth rate threshold of 4.5% over 10 years.
"Once that threshold is reached, investors will receive an additional 50% of the Bitcoin appreciation, while the government retains the remaining 50% of the excess returns."
Adams has not provided further details on how Bitbond would operate. Lander's statement emphasized that New York City typically issues bonds to fund capital assets, while financing for other purposes is limited to very specific and clearly defined circumstances.
According to Comptroller’s Directive 10, capital assets are long-term investments, such as infrastructure or technology upgrades, that can provide benefits to the city over multiple fiscal years.
Related: Cryptocurrency lobbying group pressures Senate to pass stablecoin bill without debate
Original: “New York City Comptroller Rejects Mayor Adams' Bitcoin (BTC) Backed Bond Proposal”
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