The proposal by New York City Mayor Eric Adams to issue municipal bonds backed by Bitcoin has faced strong opposition from City Controller Brad Lander, who called the plan “legally dubious and fiscally irresponsible.”
Key Points:
- Brad Lander’s Opposition: Lander criticized Adams’ plan to issue Bitcoin-backed bonds, warning that such a move would introduce financial risk and erode investor confidence. Lander, who holds a key role in the issuance of city debt, stated that he would not allow the city to issue such debt instruments while he remained in office.
- Bitcoin’s Stability: Lander emphasized that cryptocurrencies, including Bitcoin, are not stable enough to fund infrastructure, affordable housing, or schools. He argued that the proposal would expose the city to new risks and undermine the trust of bond buyers.
- Adams’ Bitcoin Vision: Mayor Adams announced plans for the Bitcoin-backed municipal bonds, dubbed “Bitbond,” at the Bitcoin 2025 conference in Las Vegas on May 28. He also reiterated his calls to revoke New York’s BitLicense program, a regulatory framework for cryptocurrency exchanges operating in the state.
- BitBond Details: The concept for BitBonds, as outlined by the Bitcoin Policy Institute in March, proposes that bondholders would receive a 1% annual interest rate over a 10-year period and a share of any Bitcoin price gains at maturity. Additionally, 90% of the raised funds would go towards government spending, while the remaining 10% would be used to purchase Bitcoin for a strategic reserve.
Lander’s Concerns and Alternative Proposal
Lander’s statement included a simulation of the potential structure for the Bitcoin-backed bonds. According to the proposal, investors would receive 100% of Bitcoin’s price appreciation up to an annual return of 4.5% over 10 years. After reaching the limit, investors would receive 50% of the further Bitcoin appreciation, with the government retaining the remaining 50%.
Lander stressed that the city primarily issues bonds to fund capital assets and would only consider financing other purposes under very limited and strictly defined circumstances. Capital assets, according to Directive 10 from the Controller’s office, include long-term investments like infrastructure and technological upgrades that benefit the city over multiple fiscal years.
