Mayor Eric Adams unleashed excitement and skepticism across the crypto community at Bitcoin 2025 when he announced plans to launch Bitcoin-enhanced bonds in New York City. These instruments, known as Bitbonds, would come with a small percentage of BTC.
Comptroller Brad Lander later publicly opposed this initiative, deeming the plan irresponsible. However, experts consulted by BeInCrypto suggest that BitBonds hold undeniable potential.
Adams’ Crypto Gambit Amid Mayoral Race
New York City Mayor Eric Adams’ recent attendance at the Bitcoin 2025 conference in Las Vegas turned heads as he fully reignited his support for the crypto industry.
His appearance was somewhat unexpected, given that City Hall confirmed his attendance a day before the event.
Adams’ speech included a pledge to champion the creation of municipal “Bitbonds,” a type of bond partially backed by Bitcoin.
“I believe we need to have a Bitbond, and I am going to push and fight to get a Bitbond in New York so you can do those same bond investments in New York City,” Adams said during his address.
The announcement’s timing coincides with the intensifying mayoral race, raising questions about Mayor Adams’ intentions.
Given his record-low approval ratings, skeptics question whether he’s leveraging the crypto industry to gain a political advantage and secure a re-election as an Independent.
When BeInCrypto contacted Adams’ press office to comment on his Bitbond announcement, City Hall spokesperson Allison Maser highlighted the Mayor’s commitment to the industry.
“Mayor Adams was the first American Mayor to have his initial three paychecks converted into crypto to signal that New York City, under this Mayor, will always embrace the technologies of tomorrow today. On the heels of our first-ever Digital Assets and Crypto Summit, Mayor Adams attended the 2025 Bitcoin Conference to continue building connections in this growing industry to boost our local economy, attract top talent, and inspire innovation in New York City,” Maser said.
Brad Lander, the City’s Comptroller and fellow mayoral candidate for the Democratic Party, swiftly criticized Adams’ Bitbond announcement.
Fiscal Caution from the Comptroller
In a press release published shortly after Bitcoin 2025, Lander referred to Adams’ Bitbond plan as “legally dubious and fiscally irresponsible.”
“New York City will not be issuing any Bitcoin-backed bonds on my watch. Mayor Eric Adams may be willing to bet our future on crypto in exchange for a trip to Vegas, but my job is to ensure our City’s financial stability,” the release read.
Adding to his criticism, Comptroller Lander’s senior press officer, Oluwatona Campbell, highlighted a lack of prior consultation when BeInCrypto sought comment from their office.
“In spite of being jointly responsible for the issuance of City debt, the Comptroller’s Office has not been approached by anyone, inside or outside of the Mayors Office, about the notion of issuing debt having any relationship to cryptocurrencies of any kind,” he said.
Putting politics aside, as crypto becomes more popular worldwide, it’s worth discussing what Bitbonds could offer as a debt instrument.
Bitbonds: A New Type of Debt Instrument?
Three years ago, Brian Estes, the Chief Investment Officer at Off the Chain Capital investment fund, proposed a US Treasury Bitbond.
“We decided not to patent or trademark the idea but to put it out in the public domain, because we think it’s in the best interest of the United States and anyone that’s issuing out bonds,” Estes told BeInCrypto.
A BitBond functions much like a traditional Treasury Bond, but it’s designed to offer added benefits to both the Treasury and the financial institutions that buy them first, later extending to the eventual bond purchasers.
These BitBonds are sold through auctions to a select group of financial firms. What makes them distinctive is that they include a small amount of Bitcoin. When the bond reaches maturity, this Bitcoin is paid in-kind directly to the bondholder, along with the full original investment.
However, according to Comptroller Lander’s comments on Bitbonds, a municipal bond would look much different than a federal one.
“While the federal government issues bonds to fund traditional expenditures, New York City primarily issues bonds to fund capital assets and in only very narrow circumstances can the City finance other purposes,” his press release read.
Lander’s press officer also mentioned other reservations regarding Bitcoin’s instability.
“Our office has not contemplated debt issuance having any relationship with cryptocurrencies given that neither current federal nor state laws are supportive of the City dealing in cryptocurrencies. Moreover, we are unaware of any benefits to City residents by dealing in cryptocurrencies,” Campbell added.
However, Estes pushed back on some of this skepticism.
The Bitcoin “Kicker” and Lower Interest Rates
According to Estes’ Bitbond proposal, if the Treasury were to auction $100 billion of 10-year Bitbonds, 1% of the $100 billion would be used to buy Bitcoin. Estes refers to this allocation as the Bitcoin “kicker.”
Assuming the price of Bitcoin is $100,000 at the time of the auction, this $1 billion would purchase 10,000 BTC. When the bond reaches maturity, this Bitcoin and the full original investment would be transferred in-kind directly to the bondholder.
Estes believes this logic also applies to municipal bonds. He even suggested a Bitcoin-enhanced bond in New York could lower interest costs for its residents.
“Bitbonds can, in my opinion, significantly lower the interest rate that municipalities have to pay. If you are an issuer of a bond in New York City, and you need to shore up a billion dollars worth of bonds, it’s better to pay a lower interest rate than a higher interest rate,” he said.
The only difference between the two would be taxability.
“Municipal bonds are not taxable at the federal level. So, you pay no federal income tax on a municipal bond– that’s the same whether it has Bitcoin in it or not, Estes explained.
Regarding Lander’s concerns, Estes said that his investment fund’s proposal keeps many of them in mind.
Is Bitcoin’s Volatility a Dealbreaker?
Among Lander’s many concerns was Bitcoin’s inherent volatility and the impact the portion of the bond allocated would have on the buyer.
“Cryptocurrencies are not sufficiently stable to finance our City’s infrastructure, affordable housing, or schools. Proposing that New York City should open its capital planning to crypto could expose our City to new risks and erode bond buyers’ trust in in our City,” he said in his press release.
Though Lander assumed that a Bitbond would allocate 10% to purchase Bitcoin for a Strategic Bitcoin Reserve, Estes pushed back on this.
According to him, only 1% of Bitcoin should initially back the bond. Meanwhile, bondholders will receive any appreciation it makes by maturity.
“When you size the amount of Bitcoin in a bond at a small percentage of 1%, it’s a de minimis risk. No matter how volatile Bitcoin is, if it’s only 1% of the value of that bond, it doesn’t show up in a volatility analysis,” Estes told BeInCrypto.
According to Estes’ Bitbond proposal, even if Bitcoin’s price drastically dropped, buyers would nonetheless receive the full principal of the bond.
Estes also noted that it wouldn’t even be the first time the US issued a bond that wasn’t exclusively backed by the US dollar.
Reintroducing a Hard Money Standard
The idea of a Bitcoin-enhanced bond isn’t a radical invention. According to Estes, it’s simply reintroducing a similar type of covenant that existed during the Bretton Woods era of the United States, when the US dollar was pegged to gold.
“Inside a bond, there are covenants. Pre-1971, bonds were repayable either in US dollars or in gold; you had a choice. In 1971, the US went off the gold standard,” Estes explained.
Bitbonds would employ a similar structure.
“All that Bitbonds would do is have a covenant like we used to have, pre-1971, and that covenant would say that 1% of the money that was invested would get paid back in Bitcoin. It’s not anything new… It’s just bringing back what’s called a hard money standard to our debt instruments,” he added.
What’s still missing is the proper framework to ensure the smooth transfer of Bitcoin to bondholders when the bond matures.
Is NYC Ready for Bitcoin Transactions?
Among Lander’s many concerns was New York City’s lack of infrastructure for Bitcoin transactions.
“New York City has neither any mechanism to pay for its Capital Assets in any other currency besides the US Dollar nor any means to convert Bitcoin to US Dollars,” he had expressed.
Estes admitted that this kind of infrastructure needs to be built. Nonetheless, he argued that creating it using existing mechanisms is fairly simple.
“There are companies like Lightspark that build on the Lightning Network that can build the infrastructure very easily,” Estes said.
Long bond maturity periods also offer ample time to develop the mechanisms for in-kind Bitcoin transfers to holders.
“Basically, what you would do is issue out the bond, get 1% of the proceeds, and buy Bitcoin with it. The government that issues out that Bitcoin will custody that Bitcoin until the bond the matures. When that bond matures, the Bitcoin and the face value of the bond is returned back to the bond holder… The distribution infrastructure doesn’t have to be set up until it’s time to distribute out the Bitcoin,” he added.
Ultimately, how Bitcoin infrastructure is handled ties into the larger question of Bitbonds’ overall financial and legal readiness.
Testing the Waters: The Need for Pilot Programs
Implementing Bitbonds will require a thorough analysis of their feasibility and impact on fiscal health. A correct application will demand a compatibility analysis with federal and state laws, tax regulations, volatility impact, and adequate infrastructure.
Regulators and lawmakers must closely examine any proposal to avoid eroding investor trust. This is especially crucial in municipalities like New York City, which have traditionally received strong bond ratings from major credit rating agencies.
That said, even as US bonds currently face historically high interest rates in the market and the nation grapples with a ballooning fiscal deficit, Estes firmly believes that Bitbonds are worth exploring. He suggests they begin with either a testing period or a pilot project.
“The federal government or a municipality needs to test the market and see where the demand lies. The wrong move is not do anything at all… You need to try it first, and then see if it works. If it works, it’s great, it has a lot of upsides. If it doesnt work, there’s really no downside to it, because the bond investor will get 100% of the investment, [while] all that’s at risk for the municipality is 1% of the proceeds if Bitcoin goes to 0,” Estes concluded.
The only way to find out is by testing it out.
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