Jordan Pearson for vice.com, | September 30, 2021

Documents Reveal Miami Mayor's Struggle to Make the City a Bitcoin Utopia

Six months after Mayor Francis Suarez announced that Miami will pay employees and accept taxes in Bitcoin, documents reveal numerous difficulties..

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Miami Mayor Francis Suarez is a celebrity in the world of cryptocurrencies for his much-publicized efforts to turn the city into a Bitcoin haven. He proposed paying city employees in Bitcoin and allowing citizens to pay taxes with crypto in February, recently hosted a major Bitcoin conference and is courting the global exodus of mining firms fleeing China after crackdowns. The city even lent its name to a new token that it hopes to make money from, called MiamiCoin

Now, emails, presentations, and reports obtained by Motherboard using a public records request show just how the quest to make Miami crypto central has gone over the last few months, and the answer is: not particularly well. 

In April, city officials researched whether other cities had entered into contracts with companies to pay their employees in Bitcoin; they found no precedent for this. In addition, a draft report sent around in late April noted numerous concerns with the plan, including that people must convert cryptocurrency to dollars to pay taxes. It goes on: 

"Second, once Bitcoin is received by an employee it is not insured by the government like U.S. bank deposits are. This means that Bitcoin stored online does not have the same protections as money in a bank account. Additionally, there may be no or minimal customer service options when using Bitcoin because it is inherently decentralized. 

Third, there is no guarantee that someone receiving Bitcoin as a salary will make money because the price of Bitcoin fluctuates. It is conceivable that an employee's salary paid on Friday could lose a significant amount of value by Saturday."

The report adds that the city can't guarantee vendors are giving it the best exchange rates, and concludes: "Procurement cannot recommend issuing a competitive solicitation to find the best value for paying employees in Bitcoin, and on terms favorable to the city. The market for cryptocurrency as payroll providers is not well established and appears to offer only net payroll deductions allowing access to Bitcoin."

This did not go down well. Staff were admonished by the city's director of procurement, who said the report "missed the mark completely" and that "I never asked for you to look at whether Bitcoin should be used to pay employees as that is not in our purview but in the City Attorney's Office's purview." The final market research report, signed on May 3, axed all of the potential pitfalls of using Bitcoin, only concluding that there are no current contracts for government entities to pay employees in cryptocurrency, but some options exist for employees to convert their earnings. 

This lack of precedent made things more difficult for city staff, who expressed that they were out of their depth on the technical side. "Since we are unable to locate any similar procurement we have no sample and we are not technical experts in the matter," the director of procurement said in a May 11 email. 

Miami chased a few dead ends while searching for successful projects to lean on. For example, it requested records from the city of Williston, North Dakota and inquired with Seminole County in Florida, both of which have been featured in the media as accepting cryptocurrency payments via BitPay. 

In fact, the City of Miami learned in a meeting with BitPay that Williston signed up for the service via their website and no formal contract exists. As for Seminole County, the county's deputy tax collector responded: "It was selected by the prior Tax Collector. The service was never used." The "prior Tax Collector" was Joel Greenberg, a close associate of Rep. Matt Gaetz who recently pleaded guilty to six federal charges including sex trafficking a minor. 

Eventually, the City decided to move forward with the process of soliciting a vendor to provide cryptocurrency services to employees and citizens. While the City Attorney's Office concluded that cryptocurrency is not legal tender in the U.S. and thus could not be handled directly, it said that the Miami government could work with a middleman that converts cryptocurrency into dollars and vice-versa. 

An early favorite was BitPay, which in an email to the city's procurement department on May 18 noted that it "works directly with Mayor Suarez." More discussions with the firm followed, including BitPay sending the city a draft legal agreement for services and a presentation on compliance. 

While the late April draft of the city's market research named options such as Bitwage and Cash App in addition to BitPay, there are no mentions of any potential partners in the signed May version, and BitPay appears to be the only company that the City has directly spoken with to date. 

The latest emails, marked September 27 (more than six months after the plan was first announced publicly), reflect that the City of Miami is currently finalizing a request for proposals in order to solicit vendors. The latest document available to Motherboard says that the city wants a successful vendor to provide training to city employees on "the risk associated with cryptocurrency purchases" and "on all aspects associated with the management and use of cryptocurrency."

Despite this acknowledgement of risk to its employees, the City of Miami is attempting to escape any possible liability from the get-go. On top of that, it wants everything for free. 

The city will "bear absolutely no liability, risk, or cost (administrative or otherwise) from the service implementation and operation," the document says, and will "not provide any funding or financial support" towards the implementation of the service. 

The City of Miami did not respond to Motherboard's request for comment.