Northern California City Comes Close to Issuing its Own ICO

This week, the Berkley ICO took a step closer to becoming a reality as it got a vote of approval from the local city council.

The California city is not the first in the US to tilt towards the adoption of blockchain technology. On Tuesday, city council officials in the Northern California’s Berkeley voted to empower the city manager to experiment with the benefits of adopting blockchain technology and an “initial community offering” (ICO) to raise money as a substitute for conventional bond offerings.

There are few firsts in a $3.8 trillion municipal bond market. However, if they push to forge ahead, Berkeley will be the first city to adopt blockchain technology in public finance for municipal-bond issuance.

The city’s first project on the list is a blockchain-driven $3 million note to raise funds for a new fire engine, according the Bond Buyer report. The debt tool would pave the way for the city to experiment the matter for issuing bonds on a public ledger. If the first project succeeds, the next project will be affordable housing.

According to a report by Berkeley’s Vice Mayor Ben Bartlett, making use of the blockchain is the city’s ticket to avoiding Wall Street.  To issue debt instruments, municipalities usually turn to the debt capital market. However, Berkeley wants the opportunity to issue bonds that are less than the $5,000 denomination threshold to attract investors. Talks are also being held to make it possible for investors to receive their interest distributions either in fiat or cryptocurrencies.

Vice Mayor Bartlett reportedly wants blockchain bonds in denominations between $10 and $25. Reducing the investment threshold makes it affordable to invest in and will provide locals with the opportunity to improve their net worth, Bartlett noted.

“It’s an exciting course to be expanding the market; and also to be creating new asset classes and opportunities for our people to own new assets, particularly in light of what is happening with creeping poverty,” according to Bartlett speaking to the Bond Buyer.

If members can look beyond their doubts, bond issuance on the blockchain might be the foundation for a striving plan.

Certainly, Berkeley has plans to create tokenized affordable housing using a municipal-bond backed ICO.

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