The Playbook for Cryptophile Politicians
How to attract crypto money, fans, and creators to your jurisdiction.
Remote work and easily movable money means that jurisdictions must now compete for residents. This new landscape of incentives pushes politicians to act like startup CEOs to attract out-of-town individuals and companies to their jurisdictions. These politicians are usually crypto-friendly. Here’s the playbook on how they succeed.
Startups have public marketing and sales efforts, but so do successful politicians. Jurisdictions develop reputations for being crypto-friendly when your reputation spreads on twitter spaces, twitter, clubhouse, and podcasts. Aim to meet with big nodes in the cryptosphere to get to know you.
Laser Eyes (#LaserRayUntil100K)
One marketing strategy is to add laser eyes to your profile picture to show your support for bitcoin. Here’s what the office of Senator Cynthia Lummis said after she added hers: “Sen. Lummis is a big supporter of digital assets and financial innovation, and the laser eyes are showing that support.”
Chairforce, Chief Shitpost Officer of Bitcoin Magazine, started the Laser Eyes meme on twitter in early 2021. The campaign is also known as #LaserRayUntil100K because people would wear laser eyes to show their support for Bitcoin reaching $100,000.
Celebrities like Tom Brady and Paris Hilton, entrepreneurs like Elon Musk and the Winklevoss Twins, and politicians like Francis Suarez and Cynthia Lummis have all added Laser Eyes to their profile pics to show their support for bitcoin and crypto more broadly. People in the crypto sphere notice the shift and comment on it, and then crypto publications like Bitcoin Magazine feature the politicians - a great way to get free press.
Post the Bitcoin Whitepaper on your Website.
The whitepaper challenge was first posed by Balaji Srinivasan to government leaders. If you post the paper, you signal your technological progressiveness. You get extra points if you do so with a simple url, like Colombia did with go.gov.co/bitcoin. If a politician can wade through the bureaucratic and technical obstacles that come up while posting the whitepaper on a government website, then that jurisdiction must have enough crypto-friendly people in the system to make it a crypto-friendly jurisdiction.
Estonia was the first state to post it on their website with the help of Siim Sikkut, former Chief Information Officer of Estonia. Colombia has posted it on theirs, thanks to the (now former) Vice Minister of Digital Economy, Jaime Castro. Some American congressmen have posted it on their personal websites. Last but not least, Francis Suarez did this on The City of Miami’s website. After you do so, make sure to tag Balaji on twitter.
Get Paid in Crypto.
The two most prominent politicians to do so are Eric Adams of New York, who pledged to receive his first three paychecks in Bitcoin, and Francis Suarez of Miami, who now receives his entire paycheck in bitcoin (here’s why he feels comfortable doing so). Many of these mayors also commit to letting all city employees get paid in crypto too.
This is a move that goes further than mere signal as you now have skin in the game! One roadblock to getting paid in crypto may be local laws barring governments from holding cryptocurrencies. A solution is to use a third party platform like Hedge or Coinbase to convert your fiat paycheck into crypto. It lets you partake in crypto volatility without the regulatory and legal burdens that come from … literally getting paid in crypto.
Accept Crypto as Payment for Fines (Legal Tender Lite)
Let’s say that it’s not in your power to decide what legal tender is. You can instead accept crypto as payment for fines, taxes, and government services.
The shining example here is Lugano, Switzerland. They now accept Bitcoin, Tether (USDC), and Lugano’s own token (LVGA) as payment for taxes, government goods, and public services, like:
boat docking fees,
garbage tax and fees,
cemetery taxes, and you can pay for
rental fees for public events,
Lugano is not the first jurisdiction to try this.
Ohio was the first state in the US to accept crypto as tax payments in 2018. BitPay, a third party, would immediately convert it into fiat. But the program ended a year later because their contract with BitPay never went through a bidding process, required by Ohio law for payment processing companies.
Other than that, Miami-Dade County in Florida has created a task force to investigate whether the county can “accept cryptocurrencies as a form of payment for County taxes, fees, and services.” Once again, the point here is to market your jurisdiction as crypto-friendly.
Even if you cannot legally hold crypto, using a third-party payment processor to let you convert fines and taxes into fiat immediately lets you signal to the world that you’re crypto-friendly. It is difficult to do, but that’s what makes this signal more potent.
Reach out personally and publicly to VCs and entrepreneurs (“how can I help”)
Sometimes, you’ve got to do things that don’t scale, like reaching out publicly and directly to venture capitalists and entrepreneurs and presenting yourself as willing and able to help them move.
Nobody has done this better than Mayor Francis Suarez. Since he first wrote his now infamous “How can I help?” tweet, he’s since had multiple coffee conversations with tech entrepreneurs. The tweet itself has got more than 2.7 million impressions. Suarez has also put up billboards in tech capital San Francisco asking tech workers (in broad daylight) to send him a DM - an overt act of resident-poaching.
The return-on-investment for all of Suarez’s tweets and coffees must number in the millions. Peter Thiel and David Sacks (two extremely prominent investors), Anthony Pompliano and Ari Paul (cryptocurrency influencers), and startup founders like Alexandra Wilkis Wilson and Steven Galanis have now moved to Miami.
And in March 2020, FTX (a cryptocurrency exchange) acquired the naming rights to the Miami Heat’s stadium for $135 million dollars. This is a strategy that not all can do though - Mayor Suarez might be the most in-demand mayor in the world, and he’s a slave to his schedule. But he certainly makes sure to take up any opportunities he comes across, like a podcast invite on twitter from a startup founder.
This personal and public sales strategy works well to attract investors, entrepreneurs, and founders.
Technical universities to produce talent (eg. Portugal’s universities, Stanford)
It is no coincidence that Silicon Valley is so close to Stanford. Tech companies are more likely to move to a jurisdiction with a top-tier university supplying them with talent - specifically engineering and finance graduates. And future tech workers are more likely to stay in your city if you have a prestigious university as well. Supplying and retaining talent are two obstacles that Francis Suarez came up against while pitching Miami to entrepreneurs and investors.
If your city can’t afford to build a new university or find a benefactor who would be willing to do so, or if you don’t want to invest in the schools you already have, consider bringing over companies and bootcamps who can do this instead. Shopify is one company that will literally train people to get a development degree. If you can convince a company to relocate to your city or to open a campus there, you’ll then have an output of talent without the cost. For some ideas on what you can offer companies, check out what cities offered Amazon to move their new headquarters to their cities.
And make sure there are great schools for the children of your tech workers.
Great quality of life (for remote workers, digital nomadism).
An affordable, clean, and safe city is a strong argument for remote workers, non-remote workers, and more to come to your city. Affordability is important! For one, companies can justify paying smaller salaries if living costs are lower in your city. Two, remote workers will try to move to your city if the rent’s cheaper - rent will take up less of their paycheck. Three, people will stay in your city if they have a great time in it. That includes not just things like recreation facilities and clubs and bars, but also urban density, public transit, and cycling paths. The key is to make the sunk costs of individual moves to your city as low as possible.
Literally make Bitcoin legal tender.
Bitcoin became legal tender in El Salvador on September 7, 2021. Nayib Bukele, El Salvador’s young president, spearheaded the push. Below I’ll go through the most notable articles from the bitcoin law, the institutions that El Salvador needed to set up to make it happen, how it changes day-to-day life for Salvadorians, and how it’s changing El Salvador’s economy.
Here’s the English text of the bill, with 16 articles. Articles 4, 7, and 14 are the most notable. By legal tender, I mean something which cannot be refused as payment for public and private debts. It doesn’t mean that someone must accept your money - but it does mean that they can’t sue you for not paying your side of the debt if you offer legal tender. A good test of legal tender: what can you pay taxes with. In El Salvador, you can now pay taxes in bitcoin (Article 4) as well as the US Dollar. But Bukele went further than making Bitcoin legal tender - he made it “mandatory tender” with article 7, which says that every economic agent must accept bitcoin as payment for a good or service.
But not everyone wants to use Bitcoin - some hate it for its environmental effects, for eg. Enforcing bitcoin sounds antithetical to its libertarian spirit. Art. 8 and the trust fund in Art. 14 guarantee that these people can exchange Bitcoin for USD instantly by setting up a $150 million trust to help cushion people from the volatility inherent in Bitcoin/USD trades. Aside from this, the government also set up 200 bitcoin cash machines and 50 consulting centres across the country. The trust fund, cash machines, and consulting centres are the major institutions set up to facilitate the transition.
As for the consequences of this move, there’s the effect on remittances, banking, tourism, Bukele’s popularity, and loans from the International Monetary Foundation (IMF).
Remittances make up roughly a quarter of El Salvador’s GDP. If they use Bitcoin, people will save ~$400 million from the clutches of WesternUnion and MoneyGram. This simply gives Salvadorians more money, something which countries heavily dependant on remittances will be watching closely (Guatemala, Dominican Republic, Philippines, etc).
El Salvador’s move to make Bitcoin legal tender has also banked the unbanked. Only 30% of Salvadorians have bank accounts, but 78% have smartphones. Once you have a chivo wallet, you have a bank account! This lets people save for their future on the internet.
Tourism to El Salvador increased by 30% after they announced Bitcoin as legal tender. The demographics shifted too. This is something that Lugano in Switzerland mentioned as one reason for why they too wanted to make bitcoin legal tender - they wanted to also benefit from the increase in tourism. In the past, tourists to El Salvador were from other South American countries. Now, 60% of tourists are from the US. Another benefit of turning crypto into legal tender is that you no longer have to pay capital gains tax on it. Buy bitcoin at 50k, sell it at 100k? Congratulations. The tax haven nature is something that makes it an attractive place for investors to live. According to Fitch Ratings, “the lack of tax on BTC capital gains could attract foreign inflows of bitcoin to the country.”
One downside of turning bitcoin into legal tender has been a dip in popularity for Nayyib Bukele. It dipped by 5%, from 90% to 85%. Another is that the IMF denied El Salvador’s request for a 1.3 billion dollar loan because it poses a risk to the country’s financial stability and consumer protection.
Here’s a video of what it’s like to pay for McDonalds with Bitcoin:
Let DAOs register as corporations (Wyoming)
Legally, DAOs are partnerships by default, but not a limited liability partnership. Wyoming’s DAO law fixes this by letting DAOs register as a limited liability partnership within the state. As a consequence, DAOs can now buy property in the state (eg. CityDAO), and DAO participants can rest assured that they won’t be sued.
FAQ on DAO Registration - Wyoming Secretary of State
The Text of the Wyoming DAO Law Itself
A Wyoming Lawyer’s Walkthrough of the Law
A developer said that the sine qua non of Silicon Valley was its culture, where failure was held up as noble. You can create all of the perfect conditions for crypto entrepreneurs, tech workers, and companies to move to your jurisdiction, but it doesn’t mean that they will necessarily come. Places like Silicon Valley flourish because of their network effects too. For the best way to solve the network effects problem, you can check out The Cold Start Problem by Andrew Chen. The points made in the article above should help you attract those first movers.