WYOMING – After years of preparatory work, the future of Wyoming’s cryptocurrency banking industry is now in the hands of federal regulators, officials in the office of Wyoming Senator Cynthia Lummis told lawmakers on Tuesday.
In a presentation to the Wyoming Legislature’s Select Blockchain Committee on Tuesday, Lummis’ policy advisers Tyler Lindholm and Chris Land warned lawmakers that Wyoming could lose its competitive advantage over other states in the race to attract cryptocurrency businesses to Cowboy State. The two men were the main architects of Wyoming’s cryptocurrency laws.
The delay, they told lawmakers, was not due to any fault of the state legislature, but to the slowness of federal regulators and quasi-regulatory organizations like the American Bankers’ Association in developing rules that allow consumers to bank with decentralized digital currency. . The most important of these steps: access for cryptocurrency bankers to an ABA routing number, an essential tool for financial institutions to perform transactions.
Such a delay, said Sen. Chris Rothfuss, D-Laramie, could cause Wyoming to lose ground to other states that are rapidly developing their own cryptocurrency regulations, costing the state its competitive advantage as other states catch up. (The Illinois legislature, they noted, is in the process of approving its own cryptocurrency banking regulations.)
“I don’t think there is much to do,” Land told lawmakers. “We’re losing our first player advantage, and that keeps me awake at night. “
A reluctant Fed
Lindholm, a former member of the Wyoming legislature who was instrumental in passing most of Wyoming’s current cryptocurrency laws, said it was “not surprising” that the regulations on cryptocurrencies face resistance from the federal government.
Wyoming lawmakers “took on a gorilla” with the passage of a law allowing cryptocurrency banks, or special purpose deposit institutions, to charter the state’s banking division, he said. -he declares. With Wyoming innovative, federal regulators will likely have to re-familiarize themselves with their own rules to be comfortable with Wyoming’s unique cryptocurrency statutes, he said.
Attitudes in Washington have heated up towards cryptocurrency. Federal Reserve Chairman Janet Yellen made statements in support of cryptocurrency regulation earlier this year. Next, Securities and Exchange Commission Chairman Gary Gensler testified last week before the U.S. Senate Banking Committee, in which he made a concrete commitment to formalize a national regulatory framework for crypto.
“I think the SEC, working with the (Commodity Futures Trading Commission) and others, can put in place stronger crypto-finance oversight and investor protection,” Gensler told lawmakers. .
Neither the Federal Reserve nor the SEC have defined cryptocurrency regulations, leaving behind a landscape that Gensler describes as a “wild west” in the financial industry. While some pro-cryptocurrency lawmakers have researched the kinds of regulations needed for decentralized currencies to have a place in traditional economies, others have pushed for more aggressive regulations aimed at minimizing short-term volatility in markets. cryptocurrency markets and protect consumers.
Lummis believes that too much regulation on the maturing industry could stifle innovation, especially at the state level, Lindholm said. Lummis also raised concerns about the federal regulators’ treatment of emerging financial technologies such as cryptocurrency, especially as lawmakers themselves continue to define the appropriate level of regulation for crypto.
“Every time we hear the term ‘regulation’ it worries us, especially at the federal level,” said Lindholm. “This leadership might not be so friendly to Wyoming.”
The production of cryptocurrency poses both economic and environmental challenges and opportunities.
In recent years, a number of cryptocurrency “mining” operations have emerged in natural gas fields around Wyoming, including two sites on state land, lawmakers have told lawmakers. Office of State Lands and Investments.
These companies capture emissions from natural gas “flaring” (the controlled combustion of waste gas at wellheads) to power generators specially designed to run cryptographic “mines”. However, flaring is much less common in Wyoming than in places like New Mexico or Texas. Unlike other states, Obermueller said, Wyoming has strict limits on flaring, limiting the growth potential of the crypto mining industry compared to North Dakota, for example. This state has built a growing crypto mining sector from natural gas operations along the Bakken formation, he said, in order to minimize the economic impacts of fluctuations in fossil fuel markets.
“We don’t necessarily need that lifeline because we have the take-away ability to bring the product to market, and we’ve been constantly working on ways to reduce, reduce, reduce,” he said. declared. “We just don’t like (flaring) here.”
It is also questionable whether the potential for cryptocurrency mining could be a “sweetener” to attract additional drilling operations to the state, he said.
“I wouldn’t say it’s in the sidelines, but I don’t know it would be the bigger driver,” Obermueller said.
Wyoming lawmakers were treated to some good cryptocurrency news on Tuesday, however.
Lummis’ bipartisan Financial Innovation Committee plans to draft legislation to formally regulate cryptocurrencies at the federal level while leaving ample room for states to come up with their own regulations, Lindholm told lawmakers. The legislation would resemble Wyoming’s, clarify regulatory jurisdiction and include language to ensure consumer protection and set out clear regulations for custodians of digital assets such as SPDI banks or cryptocurrency exchanges.
Caitlin Long, CEO of Cheyenne-based Avanti Financial bank SPDI, told lawmakers that regulation is not about if, but rather when. Cryptocurrency has grown into a $ 2.3 trillion industry, she said, and individual state efforts to establish blockchain-based businesses through decentralized autonomous organizations will likely strain the hands of the government. government if they want to tax them.
For now, the main focus of Long and other advocates remains the same: education.
“We need to educate the United States Senate on what this industry actually does and how (Congress) can be a friend, and how (crypto companies) can be a good corporate citizen here in the United States instead of leading them to overseas, which has been our consistent methodology ignoring them over the past few years, ”said Lindholm.
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