The Silicon Valley–adjacent city of Berkeley, California, is considering launching its own cryptocurrency in order to establish more financial independence from the Trump administration.
Business Insider first reported Wednesday that the city could become the first in the nation to hold an initial coin offering (ICO), the process through which cryptocurrency tokens are distributed in exchange for investments.
By attracting investors through an ICO, the city would hope to raise funds to assist in efforts combatting homelessness and its affordable housing shortage. There’s also a chance residents could use these coins for goods and services in the city, although that might be a challenge as businesses like Stripe and Steam have been unable to use cryptocurrencies for payments in the past.
The coins would be backed by municipal bonds, a security that local governments issue in order to pay for public projects. The city government would effectively use blockchain technology—a public, encrypted ledger that keeps track of transactions and underlies cryptocurrencies like bitcoin—to distribute bonds. Although cryptocurrencies are known for their wildly fluctuating prices, officials hope that this use of bonds will discourage the speculation that often leads to sudden spikes and dips.
ICOs have a less-than-stellar reputation at the moment. The largely unregulated sector has allegedly allowed accused scammers to take advantage of amateur crypto investors with Ponzi schemes, unrealistic promises, and other types of fraud. However, Berkeley officials seem to hope the institutional backing of municipal bonds will bestow their ICO with legitimacy.
Berkeley has struggled under the current White House, especially given the new tax bill, which removes incentives for businesses to build more affordable housing in the area. As Business Insider notes, current estimates suggest that the tax code may diminish the future supply of affordable housing by almost 235,000 homes in the next decade. The city’s status as a sanctuary city that refuses to cooperate with immigration officials and as a liberal bastion where riots erupted lasted year over a cancelled speech by Milo Yiannopoulos, has further strained its relationship with the administration. Trump threatened to revoke federal funding from U.C. Berkeley in the aftermath of the Yiannopoulos incident, and he has repeatedly attempted to crack down on sanctuary cities.
City councilmember Ben Bartlett, who has been leading the ICO effort, characterizes the project as a form of resistance. “The Trump administration has devoted untold resources and energy to divide us and tear us apart using race, gender, fear, jingoism, xenophobia, and capital,” he told Slate. “In order to resist we’re going to have to finance it ourselves.”
Bartlett describes a three-part committee that is currently drawing up the blueprints for the ICO. The city government, represented by Bartlett and Mayor Jesse Arreguin, is providing policy guidance. Neighborly, an online municipal bond platform, is assisting with infrastructure and underwriting. And the UC Berkeley Blockchain Lab, using its coding know-how, is conceptualizing the technology.
The plan is in its preliminary stages, and the committee won’t release full details of the project until the spring. Bartlett, however, seems optimistic about the success of this unprecedented endeavor: “We innovated recycling and solar here [in California]. … We pride ourselves on our frontier mentality.”
One more thing
You depend on Slate for sharp, distinctive coverage of the latest developments in politics and culture. Now we need to ask for your support.
Our work is more urgent than ever and is reaching more readers—but online advertising revenues don’t fully cover our costs, and we don’t have print subscribers to help keep us afloat. So we need your help. If you think Slate’s work matters, become a Slate Plus member. You’ll get exclusive members-only content and a suite of great benefits—and you’ll help secure Slate’s future.Join Slate Plus