Santa Monica is attempting to live up to its Silicon Beach tagline with a national first in digital currency.
During the July 9 meeting of Santa Monica City Council, the council unanimously approved 7-0 to pilot a Santa Monica Bitcoin Office program at no cost to the city. The item was requested by Vice Mayor Lana Negrete, with a direction to work with The Proof of Workforce Foundation nonprofit on the endeavor. The office is the first of its kind in the United States, with goals ranging from education on the currency to support of Santa Monica’s economic recovery.
Introduced in 2009, Bitcoin has become the world’s premier cryptocurrency, acting as money not controlled by any one person or entity. The currency is held in digital wallets and can be accessed from a number of online tools, with transactions publicly broadcast via the “blockchain.” Now a trillion-dollar industry, Negrete noted that she was “excited at the idea” of exploring a “wide range of applications.”
“This is not about the asset or the commodity, it is truly about educating,” Negrete said. “We have been a leader in so many things … we are currently battling a lot of negative news (and) a retail climate that’s really hard for some of our areas like our Downtown Santa Monica area. We’re consistently looking at how can we bring back economic recovery, I think these are some interesting, out of the box ideas we’ve been discussing.”
Along with support of economic partners, Negrete said the “sheer newsworthiness” of the office will bring positive press to the city, along with travelers from across the globe that are intrigued by the currency. The city currently plays host to the annual Pacific Bitcoin Festival, which brings thousands of tourists to Santa Monica each year.
Having an official cryptocurrency partnership, Negrete added, would go a long way into preventing future scams, such as a fraud scheme that targeted Latino investors last year. In March 2023, multiple households contacted city officials claiming they were victimized by a crypto Ponzi scheme ran by agents of CryptoFX, LLC., a business that became the center of federal enforcement action in Texas.
Council comment was mostly positive with a couple of clarifying questions, with Councilmember Christine Parra excited that city stakeholders were intrigued on the educational component of the partnership.
“While I’m still in the beginning stages of trying to really understand how it works … I’m excited on a personal level to learn more and also be that innovative city, which we are,” Parra said.
Councilmember Gleam Davis wanted to know if the City had insurance covering parties that may lose money in the Bitcoin market, stating that the establishment of a Santa Monica Bitcoin Office implies city approval on Bitcoin transactions.
“A lot of people made money in Bitcoin, a lot of people have also lost money in Bitcoin … I think we run a risk that if we’re out there saying this is the Santa Monica Bitcoin Office and it encourages someone to invest in Bitcoin and the investment doesn’t work out for them, they’ll turn around (and say) the deep pocket is the City of Santa Monica, I will sue the City of Santa Monica for encouraging me to make this risky investment. I’m not saying it’ll be good litigation, I’m not saying it’s valid … (but) it doesn’t take much to file a complaint in Superior Court.”
Negrete stated that she’s discussed this topic with other officials, stating that the city is “not telling anybody to invest” in the cryptocurrency, with City Attorney Doug Sloan adding that he would potentially add a disclaimer that the city “does not necessarily encourage investment” in Bitcoin. City Manager David White said that the Bitcoin Office is not a city-run entity, and any work done by Proof of Workforce would be run past city offices.
“If they identify a company that wants to locate in Santa Monica, we would facilitate the connection with the Economic Development team … it would be those kinds of activities,” White added.
Public comment on the matter skewed from full-on support to warnings on Bitcoin investment. Local television producer Terence Michael said that the Bitcoin network is a “wonderful playground” that the “big companies of tomorrow” are going to want to build on, while Bitcoin advocate Terrence Yang stated that financial services like Schwab and Fidelity allow for easy Bitcoin transactions.
“By having a Bitcoin office, you’re going to put yourself on the map, leading in innovation … I think it’s very exciting for you guys, and I want to congratulate you … (for) support (of) business and innovation in the City of Santa Monica,” Yang said.
One comment was more skeptical, however, as John Medlin noted how Bitcoin might be a “scam” for interested investors.
“(Negrete) told me we’re not going to pay (Proof of Workforce), we’re just going to encourage them,” Medlin said. “That’s like I encouraged my son or daughter, you know, marijuana is not bad for you, it can be healthy. (But it) might be a gateway to another thing. Bitcoin, I hate to tell you boys and girls, it’s a scam … we don’t need Bitcoin here.”
The Santa Monica Bitcoin Office move follows the path of El Salvador, with the country’s Bitcoin Office congratulating the Council on the move. The El Salvador office noted that Negrete had visited them in 2023 to talk about Bitcoin education activities.
