Bitcoin Bonds Face Major Roadblock: NYC Comptroller Rejects Adams’s Proposal

A proposed foray into cryptocurrency for New York City’s finances has hit a significant obstacle. Mayor Eric Adams’s vision for issuing municipal bonds backed by Bitcoin, often dubbed “Bitcoin bonds,” is facing stern opposition from the city’s Comptroller, Brad Lander. This clash highlights the ongoing debate around integrating volatile digital assets into traditional government finance.

NYC Bitcoin Bond Plan Meets Comptroller Opposition

Mayor Eric Adams announced his intention to pursue a municipal bond backed by Bitcoin during the Bitcoin 2025 conference in Las Vegas. He expressed a desire for New York City residents to have the option to invest in city bonds tied to the performance of Bitcoin, advocating for what he called a “Bitbond.” Adams also used the platform to reiterate his call for the repeal of New York State’s BitLicense program, a long-standing point of contention for crypto businesses operating in the state.

Why Brad Lander Rejected the Proposal

New York City Comptroller Brad Lander quickly pushed back against Mayor Adams’s idea. In a statement issued shortly after the Mayor’s announcement, Lander made it clear he would not approve the issuance of crypto-tied debt during his tenure. Lander’s office shares responsibility for debt issuance with the Mayor’s Office of Management and Budget, giving him significant authority over such proposals.

Lander’s rejection stems from several key concerns:

• **Legal Dubiousness:** He described the plan as “legally dubious,” suggesting it may not align with existing regulations or statutes governing municipal finance.
• **Fiscal Irresponsibility:** Lander labeled the proposal “fiscally irresponsible,” arguing it introduces undue risk to the city’s financial health.
• **Market Instability:** He specifically cited the inherent volatility of cryptocurrencies like Bitcoin, stating they are “not sufficiently stable to finance our City’s infrastructure, affordable housing, or schools.”
• **Undermining Investor Confidence:** Lander warned that tying municipal bonds to a volatile asset could “expose the city to new risks and erode bond buyers’ trust,” potentially making it harder or more expensive for the city to borrow funds in the future for essential projects.

The Comptroller’s strong stance underscores a fundamental difference in perspective on cryptocurrency adoption within city government, potentially influenced by Lander’s position as a possible contender against Adams in future elections, though he is currently running as a Democrat while Adams seeks re-election as an independent.

Understanding the Proposed Bitcoin Bond Model

While Mayor Adams’s detailed plan remains somewhat vague, a policy brief from the Bitcoin Policy Institute provided a potential model for such a “BitBond.” According to their concept:

• Bondholders would receive a modest annual interest rate (e.g., 1%) over the bond’s term (e.g., 10 years).
• Upon maturity, investors would also share in any appreciation of Bitcoin’s price during that period.
• A significant portion of the funds raised (e.g., 90%) would be used for traditional government spending, while a smaller percentage (e.g., 10%) would be used to purchase Bitcoin for a strategic reserve.

Lander’s statement included a simulated model, suggesting investors might receive 100% of Bitcoin appreciation up to a certain return threshold (like 4.5% CAGR over 10 years). Beyond that threshold, gains might be split, with investors receiving 50% and the government retaining the other 50%.

Crypto Regulation and Municipal Finance Rules

Lander’s rejection also touches upon the established rules governing municipal debt. He emphasized that New York City primarily issues bonds to fund capital assets – long-term investments like infrastructure or technology upgrades. Financing other purposes is permitted only under very limited circumstances, as defined by Comptroller’s Directive 10. Lander’s position implies that a Bitcoin-backed bond, especially one where a portion of funds goes towards purchasing a speculative asset like Bitcoin, might not align with these established rules and the intended purpose of municipal debt issuance.

This situation highlights the complexities of integrating novel financial instruments like crypto bonds within existing frameworks of crypto regulation and municipal finance law. The debate in NYC reflects broader discussions happening globally about how governments should interact with volatile digital assets.

Conclusion: A Setback for NYC Bitcoin Bonds

Comptroller Brad Lander’s definitive rejection represents a significant setback for Mayor Eric Adams’s proposal to issue Bitcoin-backed municipal bonds in New York City. Citing concerns about legal standing, fiscal responsibility, market volatility, and investor trust, Lander has effectively blocked the plan for now. While Mayor Adams remains a vocal proponent of cryptocurrency adoption, the Comptroller’s stance underscores the cautious approach many traditional financial authorities take towards integrating volatile digital assets into public finance, particularly when it comes to funding essential city services and infrastructure. The future of a NYC Bitcoin bond remains uncertain under this strong opposition.