In a unanimous vote Tuesday, the city council of Berkeley, Calif., took a step toward approving the issuance of a blockchain-based “microbond.”
Ben Bartlett, the vice mayor and council member who spearheaded the initiative, told CoinDesk by phone on Thursday: “It’s happening. We passed it.”
But the actual decision taken by the vote is a bit more convoluted.
According to Berkeley’s city clerk, the council decided to “refer to the 2018 prioritization process to direct the City Manager to produce a report outlining steps required if the City were to implement a Pilot Project for the Community Microbond Initiative within 90 days.”
Another member of the city council, Susan Wengraf, cautioned that “this action does not imply approval at this time.”
But according to a council member who preferred not to be named, the proposal is moving at a rapid clip through the “byzantine labyrinth” of city government.
“This is a really big win,” the member said, explaining that the strong support signaled by five of the nine council members Tuesday means that, rather than taking a decade, the project is likely to progress rapidly.
Bartlett says that he faced considerable opposition to his blockchain-based municipal bondgoing into the meeting, with only two members in favor. But his pitch for low-denomination bonds, tokenized on a distributed ledger, found fertile ground.
Currently, he says, costs imposed by financial intermediaries force municipal bond issues to be large and drive the minimum a person can invest up to $5,000 or even $100,000. “No one can buy them,” says Bartlett, adding, “they’re not targeted to specific needs for neighborhoods and communities.”
He believes that blockchain technology could allow for tokenized bonds selling at $5, $10 or $25 each, while simultaneously increasing transparency:
“Blockchain allows us to really disintermediate that process and make bonds more affordable for communities and for people.”
Among the projects he thinks Berkeley could fund using the bonds are a homeless shelter, an ambulance or an individual fire truck – “hyperlocal activities,” in other words.
The world is watching, Bartlett added.
His office has “calls coming in from literally every continent.” And his plans for blockchain-based municipal finance go beyond Berkeley, as a recent Medium post seemingly suggests.
But Bartlett has very little to say about the technical details of the plan. He declined to discuss what network the bonds would be issued on – a freestanding blockchain, Hyperledger, bitcoin, ethereum – or even whether the blockchain would be open or permissioned.
“I can’t speak to that,” he said. “We’ll see what the best proposal that comes in form the market is.”
The city, he continued, will solicit contracts for the project and “vendors will do every step of this process.”