NYC mayor-elect Eric Adams has come out in support of cryptocurrencies. He said that his first three paychecks will be in Bitcoin. What does Adams' support of cryptocurrencies mean for the crypto markets and will it help take Bitcoin to new highs?
Politicians globally are divided over cryptocurrencies. While some see digital currencies as an infringement on their territory, others want to milk cryptos through taxes. On one extreme, we have El Salvador, which accepts Bitcoin as a legal tender. The other extreme is China, which has been cracking down on both cryptocurrency trading and mining.
The U.S. plans to tax cryptos.
Under the bipartisan $1.2 trillion infrastructure bill, known as the Infrastructure Investment and Jobs Act, there's a provision to tax cryptocurrencies. As part of the plan, almost $28 billion could be raised from taxing cryptocurrencies to fund the ambitious infrastructure bill. While the Senate passed the bill in August, the House hasn't ratified it yet.
Bitcoin adoption has been increasing
Bitcoin adoption has been increasing and several companies have looked at investing a portion of their cash into Bitcoin. Tesla made waves in the first quarter of 2021 when it announced a $1.5 billion investment in Bitcoin. The company raised $13 billion in 2020 through three rounds of share issuance and is cash-rich now.
However, Tesla sold a portion of its holdings in the quarter and reaped gains of $101 million, which helped it post record profits in the quarter. The company also announced plans to accept Bitcoin as payment for Tesla cars.
Tesla CEO Elon Musk had a breakup with Bitcoin over its green credentials. Since then, he has been promoting other cryptos like Dogecoin.
Eric Adams backs bitcoins
Miami Mayor Francis Suarez said that he would take his next paycheck in Bitcoin. In response, Adams said that he would take his first three paychecks in Bitcoin. Currently, there isn't a provision where New York City can pay Adams in any other currency apart from the U.S. dollar.
Adams would convert his paycheck to Bitcoin through a crypto exchange. Thanks to the growing adoption and trading in cryptocurrencies, crypto exchange Coinbase has been reporting stellar growth in earnings. After trading on a weak note since the direct listing, Coinbase stock has looked strong and is up 43 percent over the last month.
Adams wants to create crypto jobs in New York City.
Adams wants to create more crypto jobs in New York City. Meanwhile, Suarez lauded Adams' backing of Bitcoin and called for “friendly competition” between the two cities in making them “crypto capitals.”
What does political support mean for Bitcoin?
Political support for Bitcoin is a positive development. It would help increase the adoption of crypto assets. Meanwhile, Bitcoin prices have come off the all-time high that they hit on the launch of the bitcoin ETF. However, there's an increased interest in cryptocurrencies among retail traders.
A peek into Robinhood’s second-quarter earnings reveals that over half of its transaction-based revenues came from cryptocurrency trading with Dogecoin accounting for the bulk. Shiba Inu fans have been trying to cajole the company to list SHIB as well. However, so far, Robinhood hasn’t added the meme crypto to its platform.