Gregory Barber cryptocurrency, blockchain and artificial intelligence for WIRED.
The transformation of Wyoming into a blockchain booster is somewhat legendary in cryptocurrency circles. Until recently, strict laws on issuers of funds prevented even residents from using a Coinbase account. But in the past two years, Wyoming has passed 13 blockchain laws, with many other proposals in the works. The question is what is the least populated state in the country, far from the technological poles and associated for a long time with an unhealthy dependence on the extraction of resources, wanting to the blockchain?
"The blockchain and Wyoming philosophies are very similar," says Caitlin Long, co-founder of the Wyoming Blockchain Coalition, a lobby group lobbying for crypto-friendly bills, many of which are libertarian.
The Wyoming push is a reflection of the mosaic of state laws of the nation, created in the absence of clear federal rules. Some, like New York, please stringent regulations. From the state Bitlicense regime, which began in 2015, involves a strict audit process for companies wishing to deal with New York residents, which causes complaints that it discourages innovation. Legislators in Wyoming, as well as neighboring Colorado and Montana, see it as open.
"It is good for Wyoming that the federal government proves that it is incompetent," says Tyler Lindholm, a state representative who, at 6 am, is doing a lot to increase the visibility of cowboy hats. -boy.
Lindholm and Long joined the blockchain legislation for the first time two years ago. Long, a former Morgan Stanley executive, became interested when she discovered that regulation prevented her from donating bitcoins to her alma mater, the University of Wyoming. Lindholm, a long-time cryptocurrency enthusiast, had already tried to solve this problem. But fellow lawmakers have mainly associated cryptocurrency with the sale of drugs and scams. "It was their first contact with crypto even hearing about it," says Lindholm. "I hurt my ass."
Their fortunes have improved by using cryptocurrency as a way to replace the earnings of the disappearing coal industry, says Long. Work with lawyers from Consensys, a company that builds and promotes Ethereum applications, has drafted bills that exempt certain digital tokens from the state's securities rules and exempts cryptocurrency from state property taxes. These laws were adopted and became, in the following year, the basis of what has long been called upon to complete the legal framework for the owners of digital assets and the companies that manage them.
The effect of these laws, however, seems somewhat mitigated, said Benjamin Sauter, lawyer Kobre & Kim, who works a lot with companies in the block chain. The problem is that the blockchain, by nature, is not easily confused with a single jurisdiction. It's pretty easy to isolate New Yorkers, but it's harder for a company to take advantage of more permissive laws in a small state. And on issues such as securities laws, companies still have to comply with federal rules. Without developing formal guidelines, the Securities and Exchange Commission Last year, it was suggested that all the chips involved in the initial coin offerings were securities and were therefore subject to federal oversight. This decision largely nullified Wyoming's plans to attract international trade companies (ICOs) into the state, added Long.
Nevertheless, the new laws have brought something to Wyoming: limited liability companies, or limited liability companies, dozens of them with "Blockchain" or "Crypto" in their names. "It's been a long time since I've been in startups and I never remember interacting with a Wyoming-based technology startup," says Stephen McKeon, professor of economics at the University of Wyoming. # 39; Oregon. "But in the last two years, just in the encryption, I've seen it many times." But I noticed that these companies, although legally based in Wyoming, have rarely established a physical presence there.
Lindholm, who co-founded his own start-up blockchain last year, BeefChain, which verifies the provenance of high-end cattle in Wyoming, says the state is on the road to attracting business. offering a deposit of over $ 100 and a post office box in Cheyenne. In other words, companies that create jobs and innovation hubs that benefit Wyomingites. He cites two bills passed in February as a first step, establishing a new type of crypto-user banking license, as well as rules allowing banks to hold digital assets. Banks licensed under the license would not be guaranteed by the FDIC and could not lend, with the obligation to retain more than 100% of their liabilities in reserve. And they should set up a physical office in the state.
In other words, when it comes to banking, it's not really a lucrative business. But it's an intriguing carrot for cryptocurrency companies, who claim that traditional banks, under pressure from the FDIC, often refuse to keep their assets or suddenly cut their services. This makes it impossible to manage a business because they need an account to pay employees and pay taxes to the IRS. This has led to creative and, in some cases, destructive workarounds. After Wells Fargo ceased its services, Bitfinex, the company behind the "stable" cryptocurrency attached, turned to Crypto Capital, headquartered in Panama, whose assets were later confiscated by foreign governments. That left Bitfinex some $ 850 million short
At least one company, FreeRange, based in New Mexico, has announced its intention to apply for the state's banking charter when applications are opened at the end of the year. Others say that they are interested. Jesse Powell, CEO of the Kraken cryptocurrency center, said his company, which had been abandoned by US banks in the past, could use such a banking license to hold cryptographic assets. I noted that due to state charters generally recognized in other states, Kraken could potentially offer services nationally. Neither FreeRange nor Kraken, which has about 50 employees in San Francisco, plan to transfer a large number of employees to Wyoming.
With a legal framework in place, Wyoming blockchain enthusiasts now have more unusual ideas about how blockchains could enter government services. Last monthThe Wyoming Blockchain Taskforce heard the results of an experiment to place land titles on a blockchain system in Teton County and a speech by Bermuda officials to collaborate on a form of digital identity. He also announced that Wyoming would be a "safe haven" for developers who fear being sued for their Internet activities. "Decentralized" applications They develop but say that they do not control.
But Powell, who attended the meeting, said he was more excited about a less appealing proposal: a form of automated LLC based on a chain of blocks that he said could help Kraken's customers bypass tedious regulations in the future. 39, other states. In this way, if a person in New York wanted to use Kraken, the company could set up an LLC in Wyoming on their behalf. "If we can get everyone in Wyoming, that would be great," Powell said, noting that even with low registration fees, his millions of users would be a "cash cow" for the state.
Long says the task force is still working on the details of the latest proposals, with plans to develop laws in July. Some initiatives, such as automated registration of LLCs, are more likely to take one form or another, while others, such as the digital identity application, are more difficult. "The technology is just not up to date," says Long.
A problem for Wyoming: the state may have fewer opportunities to distinguish itself if federal policy becomes clearer and preempts state rules. "I am skeptical that many of these ideas will gain ground at the federal level," Sauter said. "I do not see the political will to do it." A federal bill, entitled Law on Taxonomy of Tokens, would you like to try to tie the hands of the SEC and exempt some tokens from securities regulation, but Long and Lindholm argue that it goes too far in lasso states too. But for now, they can be safe. There is little indication that Congress has any interest in tackling the blockchain problem.
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