VICCO – The city commission in Vicco is set to consider whether to begin paying the police chief’s salary in the virtual currency Bitcoin.
Chief Tony Vaughn made the request during the commission’s regular meeting last week, explaining under his proposed arrangement the city would take out all applicable taxes from his salary as normal, and then convert the take-home pay to Bitcoin, which is then transferred instantly to Vaughn.
Vaughn said this proposal presents another opportunity for the small town of Vicco – with about 300 inhabitants – to make international news as the country’s first municipality to pay one of its employees in the virtual currency. The city has garnered considerable attention since approving a fairness ordinance in January that prohibited discrimination based upon sexual orientation.
“Why not be the first city to have an employee paid in Bitcoin?” Vaughn asked. “Because we’ll go down in history yet again as being the first to do something not only controversial, but totally experimental.”
Bitcoin’s popularity has grown this year as its value skyrocketed over the past few months, reaching a high of $900 per coin earlier this year. It exists only online, and transactions are made publicly over a peer-to-peer network.
Though the federal government does not recognize Bitcoin as an official currency, a federal judge presiding over a fraud case in Texas in which a man was accused of taking part in a Bitcoin-related Ponzi scheme issued a ruling in July recognizing that Bitcoin can be used as a form of currency.
There exist several questions relating to the legality of the Vicco paying Vaughn in Bitcoin, however, something he admitted at Thursday’s meeting before the city commission.
“I don’t know the legalities of it yet, that’s what we’re checking into to see if there’s going to be some kind of legal block to keep us from doing that,” he said.
City Attorney Lori Reynolds also noted the logistics of setting up such as transaction with the city, a heavily regulated government entity, paying an employee with an unregulated currency not yet recognized by the federal government.
“My question would be how is the city of Vicco going to legally acquire Bitcoin to be able to pay the money out?” she asked.
Vaughn explained the currency can be acquired through an exchange, and then instantly transferred to his own account. While the currency’s value remains volatile and could decrease, Vaughn noted under his proposal the city would only buy enough Bitcoin to cover his salary for a given pay period, and then transfer it directly to him. In that way, he added, the city would not be taking the risk of losing money in the transactions.
“The city is going to buy Bitcoin, not hold Bitcoin, instantly giving me my paycheck in Bitcoin,” he said. “And I’m instantly going to cash that in, so the transaction happens in Bitcoin. That’s all we’re looking for.”
Vaughn added the city can also begin accepting Bitcoin through the city’s planned website, on which the city will be establishing a portal to accept monetary donations. Since the passage of the city’s fairness ordinance, Vicco has received numerous donations, including several pieces of playground equipment currently being installed next to City Hall.
Reynolds, while noting she is not against the idea, said the issue would need to be researched thoroughly before she can present the commission with an opinion. She also noted the currency has been linked with certain criminal activity. Just this year federal investigators shut down an underground website called Silk Road in which the operator is alleged to have facilitated the trafficking of illegal drugs, accepting Bitcoin as payment.
“It would have to have a basis that I would be able to explain legally why we are doing this,” Reynolds said.
She then asked whether the commission would be willing to set aside funds to have her research the issue since such a transaction has never before been attempted. She noted an attorney who had knowledge of the Bitcoin case in Texas would be a good place to start.
Vaughn replied that he didn’t want the city to expend any funds in researching this issue, and that he would contact anyone needed and gather the information needed on his own time.
“I’ll take the risk on it,” he said. “All it is is my pay in Bitcoin, that’s it, and try it and see what happens.”
While the commission took no action on the matter, the mayor and commissioners will consider the proposal at a later date.