FX168 Financial News Agency (Asia-Pacific) reports that Ken Sim, the Chinese mayor of Vancouver, has proposed to make Vancouver a bitcoin-friendly city and incorporate bitcoin into the global strategy reserve, sparking significant backlash in the market. A spokesperson from the Department of Housing and Municipal Affairs stated that the Vancouver Charter does not recognize crypto payments, emphasizing that local governments are not allowed to hold bitcoin as a financial reserve. A law professor warned that the bitcoin reserve would disrupt the finances of BC province. #Latest news on bitcoin#
According to Canadian media reports, Sim is an investor in a cryptocurrency exchange, and he believes that investing in bitcoin is a responsible financial decision in an era of inflation and market volatility. He plans to present a proposal titled "Maintaining Urban Purchasing Power Through Financial Reserve Diversification - Becoming a Bitcoin-Friendly City" at City Hall on December 11.
He previously stated: "The motion we submitted does not necessarily mean incorporating bitcoin into the balance sheet. It discusses how to incorporate bitcoin into the City of Vancouver, but it is well known that this could be a good idea. I won’t elaborate further."
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Sim's proposal calls for the staff to study how to integrate bitcoin into the city's financial strategy, as well as whether investment in cryptos should occur by converting 'part' of Vancouver's financial reserves.
The document stated: "If the City of Vancouver does not consider adding bitcoin to the city's strategic assets to maintain the city's financial stability, that would be irresponsible."
However, current laws do not permit the city to use bitcoin, which may hinder Sim's ambitions.
A spokesperson from the Department of Housing and Municipal Affairs stated in a statement that BC's Community Charter and the Vancouver Charter do not recognize cryptos as a form of payment for "municipal services or other transactions."
The department stated that local governments, including the City of Vancouver, are prohibited from holding fiscal reserves in cryptos. It explained that legislation dictates how public funds may be invested or reinvested, and cryptos, including bitcoin, are not among the approved options. A spokesperson said, 'The purpose of this legislation is to prevent local government funds from facing excessive risk.'
Additionally, Dan Rohde, an assistant professor at the University of Windsor Law School, stated that the federal government also controls the national financial framework. 'I don't even think the provinces have jurisdiction, such as recognizing bitcoin as a currency in Canada,' he said.
Rohde also disagreed with Sim's claim that introducing bitcoin is a responsible measure, stating that bitcoin's volatility is significant.
He said that despite the significant value increase of cryptos since their inception 16 years ago, it does not mean they are suitable for use by the city.
Rohde described a scenario where the city accepts property tax payments in bitcoin and deposits those tax funds into reserves. However, if the city needs that money within 16 weeks or 16 months (rather than 16 years), the value of bitcoin could drop significantly during that short period, leading to a funding shortfall for the city.
'I think frankly that holding bitcoin reserves is extremely risky,' he said.
(Source: CBC News)
Werner Antweiler, an economics professor at the University of British Columbia, stated that Sim's proposal brings risks that municipal authorities typically avoid.
He said, "The volatility of bitcoin is at the same level as some of the most volatile technology stocks like Tesla and nvidia."
"Like other stocks, it is a speculative asset whose value can rise or fall, and there is no guarantee that it will retain its value."
Antweiler added that incorporating bitcoin into the city ledger may require provincial legislative reforms. The Vancouver Charter and the Community Charter outline how cities in BC operate, including specific provisions regarding how municipal authorities manage funds.
He said, "The provincial government must agree, and the provincial government has absolutely no reason to agree to any city investing in speculative assets, whether it is speculative stocks, bitcoin, or any other high-risk, high-volatility assets."
He continued, "This makes no sense in terms of reits."