New York Sticks With Crypto, Opening Blockchain Center Amid Rout

(Bloomberg) -- New York isn't giving up on the digital-ledger technology that makes Bitcoin and other tokens work even after last year's collapse of the cryptocurrency market.

The New York City Economic Development Corporation said its Blockchain Center in Manhattan will open Thursday a part of a partnership with affiliates of venture-capital fund Future\Perfect Ventures and the Global Blockchain Business Council, a trade organization. The city may also start testing the use of blockchain technology in the fall.

The center is opening at a difficult time for the industry. After digital coin prices tumbled last year by as much 90 percent, many startups working on the technology have been forced to lay off staff or even shut down as funding dried up. Some companies have also stalled trials and deployment of the technology, which makes it easier for multiple parties to share data in a trusted way. The technology is already in use at companies such as Walmart Inc.

“We are playing the long game,” Ana Arino, chief strategy officer at the EDC, said in a phone interview. “It's a nascent technology, so there's bound to be uncertainty around this evolution from year to year. While we don't know what the future holds, we want to make sure we have a seat at the table shaping it.”

The 4,000-square-foot center, located at 54 W. 21st St. in the Flatiron District in the center of the city's Silicon Alley, will offer everything from coding classes to lunch lectures for software developers to the general public. Tenants of the 12-story building include data aggregator Quovo Inc., startup investor Palm Drive Capital LLC and beauty services outfit Glamsquad Inc.

While the city is providing the one-time initial investment of $100,000, the operators will seek to raise money through membership dues and through corporate partners, which already include Microsoft Corp. and International Business Machines Corp., according to Jalak Jobanputra, managing partner at Future\Perfect Ventures.

“This is a neutral spot, there's no one platform or company that has undue influence over programming,” Jobanputra said in a phone interview. “What we want entrepreneurs to have is a choice.” Plans to establish the center were announced in May.

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Last year, New York's blockchain startups received more than $500 million in venture capital funding, up 500 percent from 2017, according to the EDC. Several of the largest blockchain employers in the world -– including IBM, R3 and Coinbase Inc. -– are rapidly growing in the city. Last year, New Yorkers had seen more than 2,200 blockchain-related job postings, up 80 percent from the year earlier, the agency said.

The center is not the first blockchain-related community space in the city. Bitcoin Center NYC, which is self funded, has been around since 2013, is open every day and hosts events monthly, according to founder Nick Spanos.

--With assistance from Henry Goldman.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Brendan Walsh