Gold Coast Mayor Tom Tate has suggested that rates could be paid with cryptocurrency in future years, despite the market crashing by $2 trillion — more than half of its total value — over the past six months.
- A rates increase of about 4 per cent is expected for Gold Coast residents this year
- It is highest in a decade but below CPI of 5.1 per cent
- The mayor says using cryptocurrency would send an innovative “signal” to younger ratepayers, but an academic says more research is needed
As the council prepares to hand down its annual budget on June 14, Gold Coast residents can expect to see a rates rise of at least 4 per cent — the highest increase in 10 years.
But Mr Tate has also announced that council will seek to hire a chief investment officer from the private sector to encourage “innovation” and investigate “joint ventures” on council-owned land.
“Why can’t we pay rates on cryptocurrency if the risk is not high?” he said.
“It sends a signal that we’re innovative and bring in the younger generation … [but] I’m not saying we’re doing it, I’m just saying we’re always looking at the next level.”
While a national blockchain industry group has welcomed the prospect, a cryptocurrency researcher has urged more caution.
Council needs ‘risk appetite’
The underlying idea of cryptocurrency is that it creates a method of payment that cuts out the middleman, like a bank.
While many find the technology confusing, chair of industry body Blockchain Australia Adam Poulton said cryptocurrency was “just another form of money” with an exchange rate linked to the Australian dollar.
“They can choose to receive that Bitcoin and hold it themselves, or they can actually exchange that Bitcoin into Australian dollars, referencing that exchange rate, and have those Australian dollars turn up in their bank account.”
But considering the price fluctuations cryptocurrencies experience, along with the existence of scams and the recent market crash, Mr Poulton said “the council would need to look at [its] risk appetite”.
“The last thing they’d want to do is accept $2,000 worth of rates, hold it in Bitcoin and for the Bitcoin price to halve,” he said.
“The other risk is the Bitcoin could go up in value and they’ll actually have three or four thousand dollars.”
He said council could instead accept 95 per cent of a rates bill in Australian dollars and the remaining 5 per cent in cryptocurrency.
“We’re happy to risk that other five per cent and actually hold that and see what future use cases could be used with it,” he said.
“But there’s a lot of stuff you have to become familiar with to use and interact with cryptocurrency in a safe way to protect your financial wealth.”
More time needed for education
Associate Professor Vallipuram Muthukkumarasamy from Griffith University’s School of Information and Communication Technology said the mainstreaming of cryptocurrency had been spoken about for years but it still remained a “speculative investment”.
“In 2015, in that era, lots of hype was there thinking ‘it’s going to take over in a year or two’,” he said.
He said while the underlying technology had “a lot of opportunity”, implementing it was the issue when it came to large bureaucratic organisations like local government.
“It’s a paradigm shift, it’s a new technology,” he said.
“Council rates, it’s open for that, it’s definitively a possibility but then acceptance, verifying the technology and implementing that, are issues.
“A lot of learning needs to happen and the confidence building needs to happen with that.”
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