By Hannah Lang

(Reuters) – With U.S. cities like Austin and Miami trying to court digital assets companies, John Wu wasn’t sure if New York City would be the permanent home for his crypto and blockchain startup Ava Labs – that was until Eric Adams was elected mayor.

Wu claimed that Adams was elected, a bitcoin-enthusiast, and played a “big part” in Wu’s decision in November to establish a New York City office.

Wu, the president, stated that knowing that there is an administration who’s friendlier, particularly in New York City, will be extremely helpful.

Adams was inducted this month. He has much to accomplish to make New York a welcoming place for crypto-hubs. New York has strict regulations regarding crypto companies. This includes a requirement for costly licensing. The state attorney general also is taking action against some of the companies involved in this sector.

Wu said Wu along with other cryptocurrency executives believe that Wu’s friendly attitude could be a draw for digital asset startups looking to establish legitimacy alongside Wall Street-based companies, and also to take advantage of the financial hub’s vast talent and investor base.

Chainalysis (a cryptocurrency data platform) also increased its focus on New York City by signing an August lease for Manhattan office space. It will house up to 200 people.

Chainalysis cofounder Michael Gronager said that the new mayor has strengthened his support of the industry. “We plan to tap into the city’s deep talent pool for our next phase of growth,” he added.

Many jurisdictions are eager to get a piece of this action, with the digital asset market growing rapidly and its value exceeding $3 trillion in November.

Adams indicated interest in creating a digital wallet to be used by city workers and beneficiaries of public benefits during his campaign. He pledged his three first paychecks to be in bitcoin following his election. Adams also suggested that New York Schools teach cryptocurrency and blockchain technology courses.

“NYC is going be the heart of the cryptocurrency industry… Just wait!” He tweeted the following November.

Adams does not yet have specific policy recommendations that could encourage cryptocurrency companies to open a New York office, as opposed to other cities like Miami or Austin which are known for their competitive taxes and low energy costs.

Adams stated that he hopes Adams’ crypto-friendly approach will bring more talent to the city. The office of the mayor did not reply to our request for comment. However, many executives think it will.

“I think it’s a very effective signaling tool to … say, ‘Okay, we recognize that this industry can benefit everyone,’” said Zach Dexter, chief executive of FTX U.S. Derivatives, a crypto derivatives exchange based in Miami.

REGULATORY ROADBLOCK

Adams is not able to work remotely from City Hall in order to reform state regulations that the virtual currency industry considers too stringent and costly.

“He can be a cheerleader,” said Stephen Gannon, an attorney at Murphy & McGonigle. The state is the main driver of regulation.”

Letitia James of New York has closed crypto lending sites.

New York’s requirements for digital currency-related businesses include obtaining a BitLicense, complying with capital and know your customer rules, as well as anti-money laundering and knowyour-customer regulations. New York Department of Financial Services (NYDFS) has only issued 20 licenses. They did not reply to our request for comment.

HaohanXu, Apifiny’s CEO and New York-based digital asset trader network Apifiny said that “Adams comments do give us more confidence.” However, all cryptocurrency companies located in NYC or looking to locate there should still be focused on BitLicense.

Adams may be able to offset the BitLicense’s disadvantages by offering other incentives such as tax cuts for businesses.

Matt Homer (ex-head innovation NYDFS) said Adams may have some power over crypto state rules. This is especially true considering Governor Kathy Hochul’s promise to support him with business issues.

Homer said that Homer could “possibly…have an influence on regulation” and is currently an executive-in-residence at Nyca Partners.

Hochul’s office didn’t respond to my request for comment.

New York will be competing with other cities and states which are cryptocurrency-friendly. Colorado passed in 2019 a law exempting digital currency from securities regulations. Wyoming created a charter with a specific purpose for crypto-related companies.

Miami Mayor Francis Suarez and Adams have already formed a friendly rivalry via Twitter (NYSE :), but he is also looking to court crypto companies that promise lower taxes, living costs, and other benefits.

According to crypto executives, there’s room for multiple cities to become the next major destinations in this sector due its booming growth. Adams could benefit from the fact that New York already attracts tech talent from Silicon Valley. Dexter also pointed out this.

“There’s this opportunity to have a few crypto capitals,” said Dexter. “I think he is going to have some success.”