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- Miami has one of the largest expatriate populations in the US.
- Many citizens have no bank account and instead use crypto to send money to family overseas.
- Two finance experts explain more about Miami's crypto-friendly characteristics.
- See more stories on Insider's business page.
Back in March, Miami's mayor, Francis Suarez, said he was selling his city as the world's cryptocurrency capital. He told DealBook: "We want to be on the next wave of innovation," and that he was "refashioning" the city's "fun in the sun" image.
Months later, his ambitions look like they might really come to fruition.
Most notably, Suarez's efforts received a boost when the cryptocurrency exchange FTX secured the naming rights for the city's NBA arena, previously known as American Airlines Area, per CNBC. Then, at the start of this month, stock-trading platform eToro and crypto wallet Blockchain.com announced plans to establish their headquarters or offices in Miami, according to a press release.
There are other key reasons that crypto is such a big deal in Miami, though.
Andrew Barnard, chief executive of Bitstop, the company that installed the first bitcoin ATM machine in Miami in 2015, and Hemang Subramanian of Florida International University's College of Business told Insider about Miami's crypto-friendly characteristics.
The first, he says, is that Miami stands as a major international financial hub. People from all over Latin America, Central America, and the Caribbean have moved to Miami. As a result, many citizens have experienced the hardships of hyperinflation in Venezuela, Brazil, or Argentina. "Some have experienced the confiscation of their wealth in countries such as Cuba and Nicaragua," said Barnard.
These citizens use bitcoin to send money back home to their friends and family.
"Customers or residents don't need to go through a double foreign exchange transaction with huge transaction costs and delays," said Subramanian. This is particularly beneficial when it comes to paying taxes, he added.
Counties and governments have property owners from international locations, e.g., in Miami, where there are many registered residents for expensive beachfront properties situated outside the state. Therefore, according to Subramanian, "it makes business sense to allow these residents to pay taxes or avail of county services by paying using cryptocurrencies - either stablecoins pegged to a dollar or another international currency, or in other forms of cryptocurrencies."
This not only helps to avoid significant transaction costs but also makes operations as seamless as possible across geographic boundaries, he explained.
Miami is one of the most "unbanked" cities in the US, studies show. Approximately one in five households do not have a bank account.
The unbanked or underbanked demographic typically use prepaid debit cards, gift cards, or check cashers, instead, Barnard explained: "This same demographic is now using bitcoin to accomplish their everyday needs from paying something online to sending money back home."
According to Barnard, many people who have immigrated from Latin and Central America, and the Caribbean, inherently understand the value proposition of bitcoin because of their unique perspective. "They are using bitcoin to empower themselves and their community. This is not just 'skin in the game.' This is 'soul in the game' for those who came to Miami to make a better life for themselves. "
Subramanian and Barnard also noted that there was an increasing number of bitcoin ATMs operating in Miami. In southern Miami alone, Barnard expects more than 350 Bitcoin ATMs to be installed within the next year. The ATM boom was because of their ease of use, he added.
Florida also has a big retiree and senior citizen population. "Bitcoin ATMs are very popular among this demographic because they find it easier to use than an online exchange," Barnard said. "Bitcoin ATMs are a gateway into the digital economy for these people, and their compounding effects on the city will become more and more apparent over time."