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Josiah Hernandez
jh@satoshi.capital
Abstract
This paper will explore the financial and technical feasibility corresponding to a New York City
coin (NYC Coin). NYC Coin is a proposed asset to be issued by the New York City government,
offering the public an opportunity to invest in the world’s greatest city.
NYC Coin
Municipal Finance’s Next Frontier
New York City Coin
Exploration Paper
NYC Coin
Municipal Finance’s Next Frontier
Contents
Contents......................................................................................................................................1
Abstract....................................................................................................................................... 2
Introduction.................................................................................................................................. 2
Definitions.................................................................................................................................... 2
Section 1: Structure..................................................................................................................... 2
1.1 Architectures...................................................................................................................... 2
1.1.1 Unlinked.......................................................................................................................2
1.1.2 Heated......................................................................................................................... 4
Section 2: Technology................................................................................................................. 6
2.1 Public Ledger..................................................................................................................... 6
2.2 Permissioned Ledger......................................................................................................... 6
Conclusion................................................................................................................................... 7
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New York City Coin
Exploration Paper
Abstract
This paper will explore the financial and technical feasibility corresponding to a New York City
coin (NYC Coin). NYC Coin is a proposed asset to be issued by the New York City government,
offering the public an opportunity to invest in the world’s greatest city.
Introduction
On Tuesday November 3, 2021 New York City mayor elect Eric Adams introduced the NYC
Coin concept during a radio interview,1 signaling an interest from the city’s chief officer to launch
a coin backed by the city government. This paper will explore the key dimensions to consider for
such an initiative.
Definitions
● Coin: Digital token corresponding to a financial or hard asset.
● Staking Mechanism: Coin protocol where new coins are issued to existing coin holders
or/and investors on fixed or variable schedules.
● Public Coin Exchange: A web or/and mobile platform accessible to the public that
offers a marketplace for coins.
● Xfer: Change in coin ownership.
Section 1: Structure
1.1 Architectures
1.1.1 Unlinked
1.1.1.1 Design
Unlinked coins utilize a staking mechanism to issue new coins, with a city tax charged on all
coin creation events. An unlinked structure would represent the creation of a pure financial
1 https://www.bloomberg.com/news/articles/2021-11-03/mayor-elect-eric-adams-to-explore-nyc-coin-similar-to-miami-s
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New York City Coin
Exploration Paper
engineering instrument. While the coin will make use of the New York City brand, it will not be
backed by the city government nor its resources, revenues, & assets in a significant manner.
NYC Coin pricing will be determined on a free market basis on public coin exchanges.
The already launched Miami Coin operates under an unlinked design.
Figure 1: Unlinked Coin Design
Source: Satoshi Capital Advisors
1.1.1.2 Commercials
Unlinked coins provide investors with a return on their investment through pre-defined in-kind
payouts, funded with new unlinked coin issuance. Payout values are defined according to a
predetermined yield equal to the coin supply growth rate.
P = Payout value
Y = Yield = Coin supply growth rate
S = Coin supply
Q = Coin quantity
P = S * Y * (Q / S)
Due to the price per coin fluctuating in local currency terms according to free market supply and
demand and that alone (i.e no significant backing from government or private sector resources,
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New York City Coin
Exploration Paper
revenues, or/and assets), investor payout values in local currency terms will vary in concert with
the price.
All coin creation events are taxed according to a predetermined tax rate, with the coin issuer
receiving the tax payments.
In theory, the New York City government can spur local demand for an unlinked NYC Coin
without backing it with government resources, revenues, or/and assets through legislation
making it a local legal tender. An aggressive implementation for local legal tender law would be
requiring all businesses and individuals in New York City to accept NYC Coin for payment. A
conservative implementation for local legal tender law would be the New York City government
accepting NYC Coin for payments. However, when considering the dollar’s universal availability
in cash and digital form throughout New York City, there will likely be minimal unlinked NYC
Coin utilization outside investment use cases.
The potential scale that can be reached with an unlinked NYC Coin with regards to market
capitalization and city revenues may be relatively limited considering its unbacked nature. For
comparison and extrapolation, the already launched unlinked Miami Coin maintains a market
capitalization around $50 million.2 With the Miami metropolitan area having $370 billion in GDP
and the New York City metropolitan area having $1.8 trillion in GDP3, it can be presumed that
an unlinked NYC Coin will maintain a similar ratio for difference in market capitalization that the
two cities maintain for difference in GDP. This results in an expectation for an unlinked NYC
Coin to have a market capitalization around $240 million. Such an initiative would produce just a
few million dollars in tax payments per year, a paltry upside when viewed aside New York City’s
$92 billion in annual revenue4.
1.1.2 Heated
1.1.2.1 Design
Heated coins utilize a traditional approach to value creation within the capital markets, with
issued coins representing a claim on future city revenues. A heated coin structure would
introduce a mechanism for equity-like investment into New York City, with the coin receiving
direct backing from the New York City government and its revenues. An optional additional
feature to bolster demand for a heated NYC Coin can be enabling NYC Coin holders to vote in
2 https://coinmarketcap.com/currencies/miamicoin/
3 https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1
4 https://comptroller.nyc.gov/reports/annual-state-of-the-citys-economy-and-finances/
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New York City Coin
Exploration Paper
city elections with a fraction of the voting power available to New York City residents,
regardless the holder’s geographic location.
It should be noted that a heated coin design will make NYC Coin a security, subject to all
securities regulations put forth from the American Securities & Exchange Commission.
Figure 2: Heated Coin Design
Source: Satoshi Capital Advisors
1.1.2.2 Commercials
Heated coins provide investors with a return on their investment through local currency
denominated dividends paid by the issuer, funded with issuer revenues. Dividend values are
defined according to a predetermined percentage revenue share.
D = Dividend value
R = Issuer revenue
P = Issuer revenue share percentage
S = Coin supply
Q = Coin quantity
D = R * P * (Q / S)
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New York City Coin
Exploration Paper
Due to issuer revenue’s year to year variance, price per coin will experience fluctuations that
reflect investor expectations on future issuer revenue.
Market capitalization for a heated NYC Coin will correspond to the revenue share percentage
allocated for dividends. For example, if the New York City government issued a heated NYC
Coin with 2% revenue share on its $92 billion in gross city revenue, then NYC Coin earnings will
be $1.84 billion per year. Presuming a heated NYC Coin maintains the standard 26x price to
earnings ratio among publicly traded American equities5,a heated NYC Coin will be expected to
maintain more than $47 billion in market capitalization - bolstering the New York City
government coffers for years to come.
Section 2: Technology
2.1 Public Ledger
If the New York City government expects wide utilization for NYC Coin, then public ledger
technology makes sense. Such technology includes distributed and decentralized ledger
protocols such as RSK6 and Liquid Network7 that enable secure, reliable, and immutable coin
issuance and xfers. The appeal for such technology with a widely utilized coin will be its open
access nature, which allows anyone with an internet connection and smart device to hold, send,
and receive NYC Coins. This in turn enables use cases such as payments and savings.
2.2 Permissioned Ledger
If the New York City government expects limited utilization for NYC Coin, then permissioned
ledger technology makes sense. Such technology includes distributed and partly centralized
ledger protocols such as Hyperledger Fabric8 and Symbiont Assembly9 that enable secure,
reliable, and private coin issuance and xfers. The appeal for such technology with a non-widely
utilized coin will be its limited access nature, which only allows pre-approved network
5 https://www.wsj.com/market-data/stocks/peyields
6 https://www.rsk.co/
7 https://blockstream.com/liquid/
8 https://www.hyperledger.org/use/fabric
9 https://www.symbiont.io/technology
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New York City Coin
Exploration Paper
participants to hold, send, and receive NYC Coins - concentrating its utilization among
institutional and sophisticated individual end users.
Conclusion
As the old saying goes, one should strike while the iron’s hot. A heated NYC Coin represents a
significant opportunity to raise capital for the city at a time when budget deficits10 and city debt11
are forefront concerns. With local and international investors hungry for new opportunities in low
risk markets like New York City and the world solidifying its place in the new digital era, the time
for such an initiative seems to be now. Being first to market for implementing a heated coin will
also place New York City in history books, further cementing its reputation as the world’s center
for financial innovation.
10 https://nypost.com/2021/07/13/nycs-next-mayor-faces-5-4b-budget-deficit-after-de-blasio-quietly-adds-300m/
11 https://nypost.com/2020/05/27/de-blasio-says-coronavirus-has-put-nyc-9-billion-in-debt/
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