After years of groundwork, the future of Wyoming’s cryptocurrency banking industry is now in the hands of federal regulators, US Senator Cynthia Lummis’ Wyoming bureau officials told lawmakers Tuesday.
In a presentation to the Wyoming Legislature’s Select Blockchain Committee on Tuesday, Lummis’ political advisors Tyler Lindholm and Chris Land warned lawmakers that Wyoming could lose its competitive edge to other states when it comes to luring cryptocurrency companies to Cowboy State. Both men were major architects of Wyoming’s cryptocurrency laws.
The delay, they told lawmakers, was not due to any fault of state lawmakers, but rather was due to the slow pace of federal regulators and quasi-regulatory organizations like the American Bankers’ Association in developing rules that enable consumers to go to banking with the decentralized, digital currency. The most important of these steps: Cryptocurrency bankers’ access to an ABA routing number, an essential tool for financial institutions to conduct transactions.
Such a delay, said Senator 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 if other states catch up. (Illinois lawmakers are in the process of approving their own banking regulations for cryptocurrencies.)
“I don’t think much can be done,” Land told lawmakers. “We’re losing our first mover advantage and that keeps me up at night.”
A hesitant Fed
Lindholm, a former member of the Wyoming Legislature who was instrumental in passing most of Wyoming’s current cryptocurrency laws, said it was “no surprise” that cryptocurrency regulations met opposition from the federal government.
Wyoming lawmakers have taken on “a gorilla” laws that allow cryptocurrency banks or special purpose depository institutions to charter with the state’s banking division, he said. As Wyoming breaks new ground, federal regulators will likely need to re-familiarize themselves with their own rules to accommodate Wyoming’s unique cryptocurrency laws, he said.
Attitudes in Washington have warmed up on cryptocurrency. Federal Reserve Chair Janet Yellen made statements in support of cryptocurrency regulation earlier this year. Then the chairman of the Securities and Exchange Commission, Gary Gensler, gave a long-awaited testimony to the U.S. Senate Banking Committee last week offering a concrete commitment to formalize a national regulatory framework for crypto.
“I believe the SEC that deals with the [Commodity Futures Trading Commission] and others, can ensure more robust supervision and stronger investor protection in the area of crypto financing, ”Gensler told lawmakers.
Neither the Federal Reserve nor the SEC have defined cryptocurrency regulations, leaving what Gensler calls the “wild west” in the financial sector. Although some pro-cryptocurrency lawmakers have sought the types of regulation necessary for decentralized currencies to have a place in mainstream economies, others have pushed for more aggressive regulations designed to minimize short-term volatility in cryptocurrency markets and protect consumers.
Lummis believes that too much regulation in the maturing industry could stifle innovation, especially at the state level, Lindholm said. Lummis has also raised concerns about how federal regulators treat emerging financial technologies like cryptocurrency, especially as lawmakers themselves continue to set the appropriate level of regulation for crypto.
“Every time we hear the term ‘regulation’ we are concerned, especially at the federal level,” said Lindholm. “That direction might not be so kind to Wyoming.”
The production of cryptocurrencies harbors both economic and ecological challenges and opportunities.
In recent years, a number of cryptocurrency “mining” operations have sprung up in natural gas fields around Wyoming, including two locations on state land, officials from the Office of State Lands and Investments told lawmakers.
Such companies record emissions from the “flaring” of natural gas (the controlled combustion of exhaust gases at boreholes) to fuel generators that were specially developed for the operation of crypto “mines”. However, flaring is much less common in Wyoming than in places like New Mexico or Texas. Unlike other states, Obermüller said, Wyoming imposes strict limits on flaring and restricts the growth potential of the crypto mining industry compared to North Dakota, for example. That state has built a growing crypto mining sector from natural gas operations along the Bakken Formation, he said, to minimize the economic impact of fluctuations in fossil fuel markets.
“We don’t necessarily need that lifeline because we have the take-away capacity to bring the product to market and we’ve been constantly working on ways to cut down, cut down, cut down,” he said. “We just don’t like it [flaring] Here.”
It is also questionable whether the potential for mining cryptocurrencies could be a “sweetie” to lure additional drilling operations into the state, he said.
“I wouldn’t say it’s on the edge, but I don’t know that that would be the biggest driver,” said Obermüller.
However, Wyoming lawmakers were treated to some good news about cryptocurrencies on Tuesday.
Lummis’ bipartisan Financial Innovation Caucus is examining the development of laws to formally regulate cryptocurrencies at the federal level, while leaving enough room for states to propose their own regulations, Lindholm told lawmakers. Legislation would be similar to Wyoming’s, clarifying regulatory jurisdiction and including language to ensure consumer protection and define clear rules for custodians of digital assets such as SPDI banks or cryptocurrency exchanges.
Caitlin Long, CEO of the Cheyenne-based SPDI bank Avanti Financial, told lawmakers that regulation is not a question of if, but of when. Cryptocurrency has grown into a $ 2.3 trillion industry, and states’ individual efforts to create blockchain-based businesses through decentralized autonomous organizations are likely to enforce the hand of the government if they want to tax them.
The main goal of Long and other proponents remains the same for now: education.
“We need to educate the US Senate about what this industry is actually doing and how” [Congress] can be a friend and how [crypto firms] can be a good corporate citizen here in the United States instead of running it overseas, which has been our consistent method of ignoring it for the past few years, ”said Lindholm.
source https://www.bisayanews.com/2021/09/25/wyomings-crypto-sectors-fate-up-to-federal-regulators-regional-news/
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