If the NYC Mayor can be Paid in Bitcoin, Why Can’t My Landlord?

As you may have heard, New York City Mayor-elect Eric Adams announced earlier this month that he plans to take his first three city paychecks in bitcoin. See here. Shortly thereafter, my brother was quizzing me about bitcoin payments and asked whether he could start paying his rent in bitcoin (a thought that I’m sure has crossed the mind of Tanker to Banker). More specifically, we discussed whether a landlord could even so much as deposit the security deposit into an online bitcoin account. TLDR; no.

A Massachusetts court would likely conclude that a landlord’s depositing of a security deposit into an online bitcoin account is unlawful because (a) the account would not be considered to be opened in Massachusetts, (b) the account does not constitute a bank that is physically located in Massachusetts, and (c) the account is not a qualifying escrow account that does not commingle with the landlord’s personal funds.

Pursuant to Massachusetts General Laws ch. 186, § 15B(3)(a) (2018):

Any security deposit received by such lessor shall be held in:

(1) a separate, interest-bearing account in a bank,

(2) [that bank shall be] located within the commonwealth

(3) [and the deposit in the bank shall be] under such terms as will place such deposit beyond the claim of creditors of the lessor, including a foreclosing mortgagee or trustee in bankruptcy, and as will provide for its transfer to a subsequent owner of said property.

(4) A receipt shall be given to the tenant within thirty days after such deposit is received by the lessor which receipt shall indicate

Failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit. Mass. Gen. L. ch. 186, § 15B(3)(a) (emphasis added).

M.G.L. c. 186 § 15B(3)(a)


Mass. Gen. L. ch. 186, § 15B—or, the Security Deposit Statute—does not define a bank. However, Massachusetts defines a bank as any association or corporation chartered by the commonwealth under chapters 168, 170, 171 or 172, or an individual, association, partnership or corporation incorporated or doing a banking business in the commonwealth subject to the supervision of the commissioner. Mass. Gen. L. ch. 167, § 1. Massachusetts has not yet addressed whether an online bitcoin account constitutes as a bank and does not consider “bitcoin” in the legislature. But, from Opinions released by the Division of Banks and Secretary of State William Gavin, it is unlikely that a Massachusetts court will look favorably at bitcoin operated as a bank in the state at the present time. Despite the lack of a key definition, case law makes clear that the courts strictly follow the language of the statute without many (if any) deviations. Specifically, case law indicates that a landlord must deposit a security deposit into (1) an account opened and a bank physically located in Massachusetts and (2) a qualifying escrow account that does not commingle with the landlord’s personal funds.

1) A court is unlikely to conclude that a landlord who deposited a security deposit into a bitcoin account actually deposited the payment in an account opened in Massachusetts or a bank physically located in Massachusetts, as is required by law.

A landlord must deposit a tenant’s security deposit in a bank that is physically located in Massachusetts. See Taylor v. Burke, 866 N.E.2d 911, 911 (Mass. 2007). Even if the bank has multiple locations, the specific branch location that the landlord utilizes to deposit the funds must be one located in Massachusetts. See Dolores v. Gustafson, 2009 Mass. App. Div. 267 (2009); Taylor, 866 N.E.2d at 911; Neihaus v. Maxwell, 766 N.E.2d 556 (Mass. 2002). For example, in Taylor v. Burke, the court found that the landlord improperly deposited the tenant’s security deposit when he deposited it at a New Hampshire branch office of Citizens Bank—a national bank with branches all other the country—that did business with branch offices in Massachusetts. 866 N.E.2d at 914 (Mass. 2007). Though the court recognized that it is possible for funds to be deposited in an out-of-state account opened out-of-state (so long as the funds were still be available to a Massachusetts branch of that bank), it refused to consider that to meet the language of the statute. Id. at 918. In fact, the Taylor court concluded that it would be for the Legislature to determine whether and upon what conditions interstate banking accounts would satisfy the requirements of the statute. Id. At the present time, there is no case law indicating that an online bitcoin account satisfies Mass. Gen. L. ch. 186, § 15B(3)(a). See id. at 911-915.   

Generally, an online bitcoin account has no physical bank. Therefore, it is impossible for it to be physically located in Massachusetts. Though case law is just recently began to mention online security deposits and bitcoins, no decisions mention that an online bitcoin account is a bank physically located in Massachusetts. See Wis. Cent. Ltd. V. United States, 138 S. Ct. 2067 (2018); Hiam v. HomeAway.com, Inc., 267 F. Supp. 3d 338 (Mass. 2017). However, bitcoin has hardly made its way through the court system—and certainly not to the legislature (note that the term “bitcoin” does not yet exist in any Massachusetts laws).


2) A court is unlikely to conclude that a landlord who deposited the security deposit into a bitcoin account actually deposited the payment in a qualifying escrow account that does not commingle with his/her personal funds.

A qualifying escrow account—as promulgated by the Security Deposit Statute—rests on the principle that a security deposit should remain the tenant’s property. Mass. Gen. L. ch. 186, § 15B(1)(e). Accordingly, the security deposit must not commingle with any of the landlord’s funds. Compare Neihaus v. Maxwell (indicating that money deposited into a single “Security Deposit Account” that only held the tenant’s security deposit and last month’s rent properly met the requirements in Mass. Gen. L. ch. 186, § 15B(3)(a)) with Lopes v. Williams (concluding that an interest-bearing personal savings account in the name of one of the landlords did not meet the “separate account protected from the reach of the landlord’s creditors” requirement in Mass. Gen. L. ch. 186, § 15B(1)(e)). Lopes v. Williams, 2010 Mass. App. Div. 227, 1-8 (2010); Neihaus v. Maxwell, 766 N.E.2d 556, 557 (Mass. 2002). Generally, there is no indication that a landlord’s online bitcoin account separates a tenant’s security deposit from the landlord’s own personal funds (let alone that the security deposit even exists once deposited as bitcoin).

Fortunately, Mass. Gen. L. ch. 186, § 15B provides for remedies if a landlord fails to follow the requirements spelled out in the statute—regardless of whether his/her intentions were benign or innocent. See Lopes, 2010 Mass. App. Div. at 8. Since it is unlikely that a tenant would like to wait for a possible lack of return of his/her security deposit and the pursuit of litigation, it is best to consult counsel to discuss remedies should your Massachusetts landlord fail to follow the Security Deposit Statute.

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  1. Really interesting topic and fabulous legal analysis!! I was totally wrong in my assumption as I thought if you could buy a car in Bitcoin, surely you could pay your rent! But I now see the issue with the security deposit. I wonder if you paid in traditional USD for the security deposit if then you could make monthly payments via Bitcoin, seems reasonable to me…

    1. lexgetdigital · ·

      Thank you!! Yes, I think that payments could be possible – provided it’s allowed per the lease agreement. Do you think your tenants will do this? Would you want them to?

  2. bengreen123 · ·

    Great read. Legality aside, I don’t see this happening simply due to bitcoin’s volatility. But stable coins could be viable in this sense. However that they run into the same issue of the absence of a physical bank. Do you see the law catching up to stable coins for everyday transactions over more volatile digital assets?

    1. lexgetdigital · ·

      Good point! I see the law catching up in the sense that I think you’ll be able to set your transactions to stable coin or bitcoin, as mentioned above. The consumer-protection, etc. type of laws like security deposits? I think we’re a long ways away.

  3. DownEastDigital · ·

    Interesting that a bank or branch within Massachusetts is required. I think it would take a really specific landlord to even accept bitcoin as a payment, but it brings up a really important point especially as cities like Miami give out bitcoin dividends. This really makes me wonder about any sort of law that requires the physical location of an intermediary and how that will need to change in the future. Especially as people are somehow paying hundreds of thousands of dollars for virtual property!

  4. Tanker 2 Banker · ·

    I would agree with Karl’s assessment of the situation. Although, I would never pay rent in an appreciating asset like crypto, at least in the short term. I will happily continue to give my landlord the liability that is the US dollar. However, I have paid for other goods online in bitcoin and, as DownEastDigital mentioned, would consider doing it again to acquire other digital assets. Interestingly, most investors in bitcoin treat it not just like digital gold, but also digital real estate since they borrow against their holdings. A crypto equity line of credit (CELOC) if you will.

  5. cloudbasedbrett · ·

    Interesting reply @hudsoncitycentre, definitely think you have skirted the legal element of a deposit and then pay regular payments in an alt currency. However, and my second time doing so today, I agree with @collarcs…why on earth would you pay in crypto? The coder who bought two Papa John’s pizzas in bitcoin must be kicking himself now (although, hopefully, he held on to enough so that he’s rich now), but why would you want to use BTC to pay rent? The currency has shown its volatility over the past 8 or so years until it levels out into something that more resembles a stable nation’s national currency, I’m not sure I would use BTC to pay anything. Very interesting topic @lexgetdigital!

  6. kaylacyrs · ·

    Thanks for the legal analysis! I actually did not even think about the fact that a bitcoin account does not have a legal bank location in MA. I also have never wondered if bitcoin is found as a term in MA legislation- that’s why we have you here! As we have said so many times over the past few months, legislation always follows the transformation slowly. Great post!

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