New York Considers Law That Would Create Local Cryptocurrencies

While cryptocurrency is widely seen as transnational, a recent bill submitted in a New York statehouse proposes what some may view as a counter-intuitive use of the technology. In the bill, the development of cryptocurrencies intersects with another ongoing trend – the creation of local currencies – to potentially establish currencies that are extremely geographically restricted.

If passed, Assembly Bill 11018 will create a pilot program allowing up to ten New York municipalities to create their own cryptocurrencies. These currencies would have to be approved by the Department of Financial Services, and “shall be issued and registered at the municipal level for use at local participating businesses for goods and services,” according to the language of the bill.

In part, the bill is an attempt to keep money from leaving local communities. The “Justification” section of the bill states that the pilot program is intended to address the “draining of revenue from local communities as neighborhood-based small businesses shut down in increasing numbers while large corporate chain stores and franchises continue to grow.”

The section goes on to describe how the digital currencies will be used, and how they will benefit communities:

“Instead of going to a chain store pharmacy, where the money spent is then reallocated outside of the neighborhood, spending community currency at a mom and pop pharmacy will reinvest that currency back into the local economy.”

New York’s move is part of an ongoing trend. Local currencies, whether crypto or not, have been introduced in cities all over the world. But these currencies vary widely in both form and purpose. 

Typically, these are “complementary” currencies, meaning they are not intended to replace the national fiat. Some more closely resemble a discount program than actual money, while others are intended to fund municipal projects or help ease poverty. 

The intent for what New York is proposing is much like the Brixton Pound – a physical local currency famous for featuring David Bowie on the ten-pound note – or Ithacash, one of the local digital currencies cited as a success by the bill. Like the proposed New York currencies, these are primarily intended to keep money in local economies.

Other schemes can be more complicated. Berkeley, California, for instance, issued an ICO intended to provide services for the homeless. The English city Hull released a digital currency that can only be earned by doing “good works,” such as volunteering or even quitting smoking. 

Tim Prentiss is a writer and editor for ETHNews. He has a master’s degree in journalism from the University of Nevada, Reno. He lives in Reno with his daughter. In his spare time he writes songs and disassembles perfectly good electronic devices.

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