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Miami makes a claim to be the global center for bitcoin and other cryptocurrencies.
Miami has a charismatic mayor, a sizable VC budget, and just finished the biggest cryptocurrency spectacular, but is it enough in the absence of legal clarity?
The question of whether Miami has what it takes to become “the world’s cryptocurrency capital” appears plausible as the city recovers from the “high” of hosting the “largest-ever” Bitcoin event. – a new position anticipated by its vivacious mayor. If not, may Miami at least develop into the next Crypto Valley, serving as a hub for blockchain and cryptocurrency innovation similar to Zug, Switzerland?
The optics appear to be excellent. The city has gone “full crypto,” as the New York Times reported in its coverage of last week’s Bitcoin 2021 conference, with Bitcoin ATMs dotting Miami’s Wynwood area. In the meanwhile, cryptocurrency exchange FTX has acquired the naming rights for the Miami Heats arena, and Miami mayor Francis Suarez has proposed, among other things, allowing residents to pay taxes using cryptocurrencies.
Others, however, warn that much work still has to be done and that legal and legislative developments must come out favorably before Miami can claim to be the capital of anything in the quickly developing cryptoverse.
Enabling legislation is critical
The importance of enabling laws
Zachary Kelman, managing partner at Kelman Law, told Cointelegraph that “Miami cannot achieve this without the Florida state legislature approving pro-crypto legislation,” which was followed by a query regarding Bitcoin 2021 being a landmark occasion and sign of great things to come. Yes, but primarily because of the repressed demand for such a meeting given the crypto boom market that prevailed throughout the outbreak, Kelman replied.
Kelman is not a crypto skeptic; quite the contrary. He is a member of the Florida Blockchain Business Association, which is actively advocating for the state legislation required to enable cryptocurrencies. Even without federal law, he claimed, Miami may develop into a centre for cryptocurrencies if that is secured because:
“State legislatures largely control money transfer regulations, which are essential to the success of crypto firms in a given region. The exchange area continues to see the most activity, followed by the expansion of “DeFi” enterprises, which frequently also come within state money transfer regulations.
Hemang Subramanian, associate professor at Florida International University’s business school, told Cointelegraph that Miami offers additional benefits over other developing crypto centers, even Wyoming, which already has state legislation supportive of cryptocurrencies. Many venture capitalists and high-net-worth people are interested in supporting innovation, and Miami is a global metropolis with a strong financial system. Additionally, “it is one of the country’s main financial centres, with a sizable port and a sizable expat community from South America, the Caribbean, and Europe.”
A lawyer at Kobre & Kim LLP named Benjamin Sauter concurred with Subramanian that Miami was a desirable location and a thriving commercial center, “especially as digital currencies begin to take the Latin American market by storm.” He said that Florida’s lack of a state income tax is another benefit. Even with supportive state laws, these advantages might not be enough to turn the city into a major worldwide crypto hub: “Most of the significant legal work has to come at the federal level. Anti-Money Laundering, international cooperation and asset recovery, and tax enforcement are major topics of discussion at the moment. Rich people and businesses operating in the [crypto] field would be wise to prepare for government oversight and enforcement actions in these areas rather than waiting impatiently for a solution.
The chief business officer of Blockchain.com, Lane Kasselman, was understandably enthusiastic about the company’s sunny new second home and told Cointelegraph, “Miami is already the [new] Crypto Valley, and the announcements last week prove it.” Blockchain.com recently announced that it was moving its U.S. headquarters from New York to Miami. He said that Mayor Suarez is actively promoting technological investment in the area and that “Miami’s favorable regulatory climate will help foster crypto innovation.”
Miami from a distance
How was the view from a distance? “I think that Miami is in a very strong position to become a blockchain hub like the Crypto Valley in Switzerland and the crypto nation Liechtenstein,” said Thomas Nägele, an attorney who helped shape Crypto Valley, to Cointelegraph, but with the following qualifications:
“A blockchain hub is not something that can simply be forced; it needs community support, a specific number of businesses who are operating in this space, and, last but not least, legal clarity.”
Nägele emphasized that the importance of this final point, “legal certainty,” and that “the greatest example for it is Liechtenstein with its TVTG — also known as the Blockchain Act.”
The ability of crypto to be “swallowed up” by the larger tech ecosystem, which can lessen the appeal of blockchain projects, is a challenge for larger cities and countries, according to Ian Simpson, senior marketing and communication manager at Bitcoin Suisse AG, a company based in the Crypto Valley. He said, “Some of the things that have made Switzerland’s Crypto Valley what it is include close interaction and availability to ideas, skill, and excellent services. We’ll have to wait and watch how Miami plays out.
For his part, Nägele said it was “a tragedy” that most European nations were barred from the Bitcoin 2021 event due to a quarantine list, but added that it was “an incredible event” and that “this is always a good start for an ecosystem.” According to Kasselman, who stated that “there’s no doubt we’ve hit a vital inflection point where crypto has moved from niche to mainstream,” “what’s significant is that the conference wasn’t just about Bitcoin, it was about the ecosystem: From DeFi to NFT to SushiSwap. Not just a [single] highly valued token, cryptocurrency is an entire industry.
A new gravitational center brought by Miami’s Bitcoin plan, least?
Is it even feasible to pinpoint the hub of the blockchain/crypto world, and if so, might it shift over time? According to Nägele, it may occasionally change depending on where the pertinent enterprises might find favorable conditions. Asia has just caught up with Europe, particularly Switzerland and Liechtenstein, who were undoubtedly early adopters. I’m eager to welcome Miami to the group, but I also hope that we will view the globe as a crypto center.
The U.S. has a strong position in the blockchain and cryptocurrency field thanks to its technological leadership and the recent IPO of Coinbase, said Simpson. On the regulatory front, Europe and Switzerland appear to be more open, and the Asian ecosystem also carries a lot of weight due to scale. However, he continued, it is still challenging to identify a single point of concentration in the blockchain ecosystem.
Kasselman continued, “While the U.S. and Europe receive most of the publicity, Latin America and Asia have the strongest retail user growth.
“I think Miami could easily be the American capital of crypto if it isn’t already,” noted Kelman. “However, without federal legislative support, it is impossible for Miami to become the international crypto capital,” and recent signs “point to more onerous federal legislation rather than crypto-friendly laws in the near term.”
Subramanian said that regulation always follows innovation, and “in a democracy, the people’s ‘will’ will eventually play out.” That is, the requisite state and federal legislation will come eventually. “If Zug in Switzerland can become a crypto-blockchain haven, Miami can too. It is more diverse, more international, and much more capital-friendly,” he added.
