Thread by @stateofthecity

So, I've been looking at this Berkeley, CA crypto thing, and yeah, it's more like Berkeley Bonds than BerkeleyCoin. Not dismissing it, but: we looked at issuing retail debt in my Wpg City Hall M/O days and the real problem was it was just uncompetitive...
govtech.com/biz/Berkeleys-…

Issue came up b/c a persistent, retired finance guy kept hassling the Mayor on why we weren't issuing retail bonds, so I dove deep. If we cut retail investors a worse deal by giving them less interest, the costs of retailing ended up offsetting that benefit. And if we made it -

- a great savings tool for the public, that meant giving them higher interest, which cost us even more. So we couldn't figure out any reason to do it other than optics, and passed. BerkeleyBonds would add one discernible consumer benefit outside the coupon: anonymity.

Which is awkward, since that would essentially make them bearer bonds. And there's a reason bearer bonds are a popular plot device in major crime movies like Beverly Hills Cop, Die Hard and Heat...

On the other hand, the blockchain feature does make it easier to retail them to a large market, and the (apparent) decision to stick to US$ currency reduces some of the scary parts of this experiment with real cryptocurrencies.

So over and above any regulatory issues they'd face, it feels like Berkeley and partners have gone two steps closer to a financial use case for blockchain, but it still seems like a few steps away from a consumer benefit which isn't either (a) risks of volatile cryptocurrencies -

Or (b) regulatory suspicion that comes from de facto bearer bond status, or (c) both.