Elected officials in Berkeley, Calif., are reportedly exploring the launch of an initial coin offering (ICO) to raise funding for community projects. Officials indicate that the cryptocurrency idea came from the city’s desire to create more financial independence from the federal government, as the GOP threatens to cut funding from so-called sanctuary cities, targeting Berkeley in particular in recent tweets over its policies on illegal immigration. (See also: Over 1M Join Waitlist for Robinhood Crypto Trading.)
Under the initiative, the California city known for its liberal agenda would apply blockchain technology to public finance to fund programs such as affordable housing and aid to the growing homeless population in the area.
Berkeley would be the first to go to the $3.8 billion municipal bond market offering investors the option to buy monetized digital “tokens” backed by municipal bonds. Buyers of the tokens may then be able to spend them at various shops and restaurants, or even pay rent at apartments participating in Berkeley’s cryptocurrency ecosystem.
City Seeks Financial Independence from Trump Administration
Berkeley Mayor Jesse Arreguin and City Council Member Ben Barlett have formed a committee with financial technology platform Neighborly to build a strategy for the ICO. The fintech company’s co-founder Kiran Jain suggested that the city could launch what it’s calling an “initial community offering” as soon as mid-May. “Unlike most of the ICOs which deliver coins for a future value or service, these coins will represent a real security issued for a specific purpose,” said Jain.
In general, the university town is looking at the potential creation of its own financial mechanism as a part of its “resistance” to the Trump administration. The city points particularly to the recently passed GOP tax overhaul, which slashed the corporate tax rate from 35% to 21%, as a main driver of discontent. According to public accounting firm Novogradac & Company, the Trump tax plan, which the city suggests undermines incentives that encourage private contractors to build affordable housing, could reduce the future supply of affordable rental housing by about 235,000 homes over the next decade. This is a major issue for a city combating gentrification, rising rents and homelessness up 43% since 2009—the start of the bull market.
Last February, President Trump vowed to pull federal funding from the University of California at Berkeley after violent protests at the university. The city, which has increasingly refused to cooperate with the federal government as it attempts to crack down on illegal immigration, could be the first of many to seek more financial independence from the administration. (See also: Crypto, Cannabis, FOMO Drive New Investor Inflow.)