The city of Berkeley, California has been working on a plan to get the sale of their municipal bonds on a blockchain system for quite some time now. The plan here is to make use of the blockchain tech to raise funds for community projects. The project took another step forward towards becoming a reality as the Berkeley City Council unanimously approved it last night.
This new system is expected to help tackle the issue of affordable housing the city. This project has the backing of Mayor Jesse Arreguin and Councilmember Ben Bartlett. Together the two government officials are working in association with the UC Berkeley Blockchain Lab as well as a San Francisco-based financial startup, Neighborly. The project has been dubbed the ‘Berkeley Blockchain Initiative’.
This project is also being called an ‘Initial Community Offering’ as it aims at raising funds for community projects. Councilmember Bartlett commented that the idea of getting micro-bonds on the Blockchain system is to get around the Wall Street. Another target of this project is to provide an additional method of funding the city’s financial infrastructure. The project intends to increase the investment made by the community as well as reduce the minimum price of the bonds.
While current minimum denomination of a bond is $5000, this project would bring in micro bonds which would start from as low as $10 to $25- making investments possible from everyone regardless of the capital that they want to invest. These micro bonds would be recorded on an open ledger on a blockchain platform.
The plans don’t end there. Bartlett stated that if it is allowed by the legal regulatory systems, he also aims at taking things to the next level by introducing cryptocurrency tokens to fund these municipal projects. However, while the house unanimously agreed on blockchain based bonds - not everyone agrees with this idea. Councilwoman Susan Wengraf commented on this, saying:
“I don’t know much about it, but I know it’s very unstable. The examples used by other communities successfully [issuing mini-bonds] was based on dollars - cash, not cryptocurrency. I would be very happy to support the first part of the proposal and more sceptical about cryptocurrency.”
Berkeley has been in the crosshairs of Donald Trump who had hinted in February that the local university may soon lose support from the central government and the federal funding might be cut off. Donald Trump is not pleased with the city of Berkeley because it is a sanctuary city and it does not have to comply with Trump’s anti-immigration laws. The government has hence been threatening sanctuary cities that they will stop the fundings if they do not comply with the orders.
The development of a local cryptocurrency would be a good way of raising funds in case the federal government decides to act harsh and block the fundings for the city. It is an interesting time for blockchain technology - and this is just the tip of the iceberg as much more is expected of this in the years to follow.