New York City needs to think creatively about its post-pandemic recovery, says a candidate for city comptroller. This includes investments in the city’s blockchain industry.
Reshma Patel, a Democratic candidate for the city’s chief financial officer position, unveiled a “future proof” plan for New York on Monday centered around investments in blockchain businesses and cryptocurrencies. There are 12 candidates for the office, including 10 other Democrats, according to Ballotpedia.
“My reason for running for comptroller is I’m concerned about the long-term financial health of New York City, especially after the COVID-19 pandemic,” Patel told CoinDesk.
She hopes that her proposal, if enacted, would increase the city’s efficiency in approving contracts, spur new businesses to operate within the city and diversify local pension funds.
Under Patel’s plan, New York’s five retirement systems would invest up to 3% of their funds into cryptocurrencies, the city itself would invest in funds with blockchain exposure to help support fintech startups and New York would utilize a blockchain-based system for its procurement contracts. Patel also wants to work with the New York Department of Financial Services to streamline the BitLicense.
She sees tangible benefits in adopting a blockchain system to track and update procurement contracts. The comptroller’s office typically has 30 days to approve a contract, but depending on the project, different entities within the city government may have to weigh in.
Patel said tracking changes and budget issues on a decentralized ledger would make it easier for different parties to be involved while maintaining transparency around the process.
A lack of transparency currently makes it difficult to budget, take out loans or work with community efforts, she said, citing personal experience from her work in the city.
Headwinds
Much of Patel’s proposals would require dialogue and buy-in from different parts of the city or state apparatus, she said.
Patel acknowledged that the comptroller would have to work with the pension funds’ trustees to invest in crypto at all, and that this may be a difficult proposition.
“As the custodian of the city’s five pension funds, the comptroller has the fiduciary responsibility to manage these funds,” she said.
In her view, this means ensuring proper risk management is in place, but she sees investing in crypto as an appropriate hedge against possible inflation or the S&P 500 dropping.
“With inflation expected to rise in the next few years, and bitcoin expected to continue its checkered but consistent upswing to ‘the moon,’ a minimal allocation to the most dominant of all cryptocurrencies can help diversify and protect the City’s pension fund investments,” the proposal reads.
Other issues include cryptocurrencies’ environmental impact. The current city comptroller, Scott Stringer, announced a plan to divest from fossil fuels earlier this year, citing damage from climate change.
The climate impact of cryptocurrencies have been under scrutiny amid the recent bull run and growth of products like non-fungible tokens.
Patel believes that a move toward renewable energy sources, particularly in New York, is feasible.
“The city has already made a commitment to divest from fossil fuels, and that is a commitment I would uphold,” Patel said. “This is a financial innovation and it’ll get more stable and reliable and sustainable over time, and the only way to make it more sustainable is to engage with it.”