Rio De Janeiro is putting crypto on its balance sheet, and it won’t be long before other governments get FOMO, Fidelity researchers said.
Brazil’s second-largest city is allocating 1% of its treasury to cryptocurrencies, Rio de Janeiro mayor Eduardo Paes said Friday.
The announcement confirms a 2022 prediction from Fidelity Digital Asset researchers: that more governments and central banks will acquire digital assets. It comes down to keeping up appearances and staying on top of new innovations, they said.
“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers,” Fidelity Digital Asset researchers wrote in a report published on Jan. 6, 2022.
Other cities and sovereign states are going to have to start thinking ahead if they want to maintain an edge, even if the value proposition of cryptocurrencies is not immediately clear, researchers said.
“While Rio de Janeiro is a city, and technically the mayor mentioned cryptocurrency, not bitcoin specifically, we see the overall game theory as the same,” said Chris Kuiper, head of research at Fidelity Digital Assets. “In other words, entities are viewing bitcoin acquisition now as a small insurance premium to pay.”
Paes also mentioned plans to offer citizens who pay property taxes (known in Brazil as IPTU) in bitcoins a discount, according to a report from the Brazilian newspaper O Globo.
Long-time cryptocurrency fan Miami Mayor Francis Suarez also spoke at the Rio Innovation Week summit where Paes made the announcement. Suarez is looking to allocate a portion of Miami’s treasury to digital assets, he said last year.