Crypto, Miami and the technology hubs of the future

With help from Mohar Chatterjee, Derek Robertson and Mark Scott

MIAMI—Yes, even this sunny city is feeling the crypto winter.

During the crypto boom, when regions around the world jockeyed to become the next Wall Street or a new Silicon Valley, Miami distinguished itself by both its zeal and its success in attracting crypto firms to the city.

A year ago this month, DFD launched with coverage of Bitcoin 2022 from the Miami Beach Convention Center. Since then, crypto markets have crashed twice, while Washington has embarked on an ongoing crypto crash that has industry leaders threatening to move abroad. And much of the public’s fascination has turned to the latest craze – artificial intelligence.

I spent the first half of this week poking around the city’s crypto scene to see what its experience can tell us about the worldwide race to attract the industries of the future.

Takeaway from this hibernation period: Don’t count on crypto to transform your city, but don’t count it out either. And be aware of the tail risk that your tech hub dreams will end up being derailed, not by fraudsters or regulators, but by luddite millennials.

Mayor Francis Suarez is spreading his bets.

A year ago, Suarez — who already took his salary in Bitcoin — marked the opening of the crypto conference by unveiling a statue of a laser-eyed, robotic bull, a fiberglass-and-steel that testifies to his crypto-hub ambitions.

Now, based on the city’s experience, he highlights economic diversification as key for local governments looking to strengthen their economic base:

“We would recommend choosing more industries to fight to create a stronger local economy of companies and investors,” Suarez, a Republican, wrote in response to questions from DFD.

Then there are the municipal branding issues that come from embracing a go-go industry.

A year ago, the Miami Heat played in the “FTX Arena”. As of this month, the location has been renamed Kaseya Center, after an IT service provider with local headquarters.

When asked about possible damage to the city’s reputation from crypto scams, Suarez replied, “Miami’s brand is technology and innovation that is broader than just the crypto industry,” while name-checking real estate technology, education technology and AI as promising sectors.

The decline here has been noticeable, if not catastrophic.

Brandon Green, director of events at BTC Media, which organizes the annual Bitcoin conference, tells DFD he expects 15,000 attendees at Bitcoin 2023 next month. Around 25,000 attended last year’s extravaganza.

In a highly unscientific poll conducted by DFD this week in a private Telegram channel for institutional crypto investors in Miami, more of the 32 respondents, 43 percent, said the city’s crypto scene was less thriving than a year ago, compared to a quarter who said that it was more enjoyable.

Miami and Crypto don’t give up on each other.

Suarez said he remains excited about the technology’s potential. Most investors and entrepreneurs here talk about hunkering down for the long term rather than giving up.

“We believe Miami remains the most attractive jurisdiction in the US for crypto,” Jalak Jobanputra, founder of crypto-focused Future Perfect Ventures, told DFD.

The crypto bust may not be the biggest problem.

One meeting made me wonder if the bigger challenge to this and other cities’ tech hub ambitions would turn out to be a larger turn away from tech… and away from hubs.

Over lunch, a recently arrived venture investor, who was granted anonymity to discuss candidly the status of his business, confided that he was already seeing the exits.

He described getting hits from the collapse of stablecoin TerraLuna and from a portfolio company with exposure to FTX. While many frustrated venture investors have turned from crypto to the current hot technology, AI, the millennial investor said his AI research had not inspired investment ideas. Mostly it had made him anxious about the future of humanity.

Just a few months after moving to Miami, he seriously considered leaving. But unlike others in the industry, he wasn’t talking about London, Dubai or Singapore.

Instead, he and his girlfriend explored the purchase of a farm.

Karine Perset and Audrey Plonk may not be names you first associate with artificial intelligence. But as the heads of the Organization for Economic Co-operation and Development’s AI unit and the group’s digital economy department, respectively, the two women have spent much of the past year holding informal workshops with policymakers, industry leaders and academics to find out what the future. of AI is going to look like — and, more importantly, how officials from across the West can respond quickly to its rapid progress. “In many cases, decision makers are surprised by the technological developments,” Perset told us, adding that these discussions predated the latest generative AI craze. “So (this work) looks timely, but we’ve been preparing for a while now.”

As part of that work, the OECD set up a new working group this week — led by UC Berkeley’s Stuart Russell, IBM’s Francesca Rossi and the German government’s Michael Schönstein. The aim is to formalize the last year of discussions in the group of mostly rich countries to look at how artificial intelligence will develop in the coming years: “We look at the future, but as what happens in 10, 20 or 30 years and perhaps even longer, said Perset. “Police officers are not very fast, and it would be helpful to just have that lead time to prepare for what’s coming.”

There are also some short-term pain points that countries have to contend with, added OECD’s Plonk. Ever since the public’s imagination has been captured by ChatGPT and its competitors, officials in the US, EU and elsewhere have been quick to call for new rules — but few, if any, of those officials know what those rules should look like. “People are all over the place on this specific question of ‘do we need a new AI regulator’ or ‘do we just give existing regulators new authority to deal with AI?'” Plonk said. – We see a bit of everything. Different stakeholders are in different places, different countries are in different places. There is something different here for politicians, there is something real, and this is a cry for help.” — Mark Scott

[Ed. — Read Mark’s in-depth look at the global landscape for AI regulation in today’s Digital Bridge.]

The Future of Data Initiative at MIT published a white paper this week on how to design more accountable and traceable financial data systems. A tall order, to be sure. But information responsibility has been one of Daniel J. Weitzner’s research focuses for over 15 years.

Weitzner is co-director of the Future of Data Initiative (he is also a teacher of public policy on the Internet and holds a senior research fellow at MIT CSAIL). Information responsibility really only means that the use of personal data must be visible to data subjects. And that the companies or authorities that use personal data should be held responsible for misuse. It’s been a longtime research interest of mine,” Weitzner said.

An example of such a consumer data sharing system that the FDI White Paper focuses on is the open banking ecosystem – which broadly encompasses the use of open APIs to allow third-party developers to build apps around a financial institution. Researching that kind of ecosystem requires a lot of coordination—but some of MIT’s consumer-facing data contributors include Visa, MassMutual, Fidelity Investments, and Capital One. The initiative spans six concurrent policy-relevant areas research projects. “We expect to have initial results in many of these areas — particularly in terms of traceability and accountability — within this calendar year,” Weitzner said. — Mohar Chatterjee