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Can New York Embrace Cyber Wallets and Cryptocurrency?

"Bitcoins and Cryptocurrency coins on $10,000 straped stacks of $100 dollar bills cash money" by Crypto360 is marked with CC BY 2.0.

REBEKAH ROBINSON, HOST: Mayor Eric Adams has doubled down on his campaign promise to lead New York City through a digital transformation. In a speech in Los Angeles on Wednesday, the mayor reiterated his commitment to expanding cyber wallets for New Yorkers. David Yermack is a Professor of Finance at NYU Stern School of Business. He says cyber wallets and crypto-currencies can be used to broaden access to the financial system.

DAVID YERMACK: A cyber wallet is essentially an account on a computer network, where you could hold a type of money, maybe US dollars, or maybe some other type of coin, even something like Bitcoin. And the real intent of these is to give financial access to people who don't have bank accounts, who don't participate in the regular financial system, because they don't meet the qualifications, whether their income or wealth qualifications are very often documentation problems.

ROBINSON: I'm wondering, you know, how might it impact, New Yorkers with these barriers? How might it help us circumvent the barriers that you mentioned?

YERMACK: It's an interesting problem, there's an idea that people who are homeless people who are poor, people who are perhaps undocumented immigrants, could use this as a substitute for bank accounts. But I think, very often, there's a naive belief that you can just onboard them, but many of these people won't have the documentation that's required by law, or won't have access to it.

ROBINSON: How accessible is this technology,

YERMACK: Often you need a smartphone. So, ironically, the number of people who don't have bank accounts is far greater than the number who lack smartphones. So there's, there's a lot of the unbanked who are nevertheless, not unphoned. And you can, you know, bring in a number of people into the financial system, who are essentially not banking, the way that regular people bank. But often this is by choice, if there are some people who don't open bank accounts because of privacy concerns, because they don't trust banks. They don't like the way that the government regulates banks and so forth.

ROBINSON: How would you explain the importance of crypto to maybe an average person on the street,

YERMACK: It really is an advance in security and speed and accuracy of payments. If you owed money to me and wrote a paper check, which you still might do in the United States, it would take a couple of days for the money to travel from your account to mine And this really could happen in a matter of seconds. And the reason it takes so long is that the old system is so clunky. And there are so many people benefiting from charging fees for not updating it. So a lot of people have, you know, stakes in maintaining the status quo.

ROBINSON: How is Mayor Adams, you know, been moving New York, towards embracing crypto and embracing these kinds of cyber wallets?

YERMACK: You know, I've heard a lot of talk, but I've seen almost no noticeable action. You know, when he took office, he made a big show of taking his first several paychecks in Bitcoin. And I said that it's the same as him just cashing his paycheck and buying Bitcoin. I'm not sure what this really means for the city. But the reality is the regulation is not at the city level, it's at the state level and the federal level. And there's really not much that the mayor of New York could do one way or the other, except perhaps cutting taxes.

ROBINSON: Professor David Yeromack. Thank you for being here.

YERMACK: Thank you very much.

ROBINSON: That Was David Yermack, Professor of Finance at NYU Stern School of Business.

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