Will becoming the first state to charter crypto banks transform Wyoming into a bustling tech hub or deposit it in the lawless Wild West?
BY MARK WILCOX
One year before statehood in 1889, innocent blood marred Wyoming territory’s Wild West prairies. Homesteaders intent on taking advantage of prime cattle prices and free land fenced off their allotted 160-acre portions for small herds. But cattle barons claimed they had rights to the homesteaders’ land since their cattle had historically grazed in the area. They also said the fledgling herds incorporated stolen cattle, claims later proven false or exaggerated though widely circulated.
Big-time cattlemen soon hung a perhaps-married couple with back-to-back acreage in the first salvo of what would become known as the Johnson County War. After murderous mobs later invaded with lynching orders for about 70 men, small landowners eventually won the right to fence off property in Wyoming to protect them from big-time interests.
Now, 130 years later, the land grab is back with digital property at stake.
THE NEW RANGE
Since the Wild West days, agriculture has faded to the No. 3 industry in Wyoming behind energy and tourism. The Cowboy State, whose official nickname is the Equality State, has long spoken of the need to diversify into technology as fossil energy falls out of favor.
“We do a lot of coal, oil and gas, and those don’t necessarily have the bright, shiny futures they once did,” State Sen. Chris Rothfuss (D) told MarketWatch. Rothfuss chaired the Wyoming Senate’s blockchain committee. “We’re really looking for opportunities to bring advanced emerging technologies to Wyoming,” Rothfuss said.
The feeling is bipartisan in libertarian Wyoming. Leaders couch cryptocurrency as an asset the traditional financial system can’t graze with their herd of wallets. U.S. Sen. Cynthia Lummis (R) argued on the Senate floor last October that cryptocurrencies offer people a place to save and avoid hyperinflation caused by exploding debts.
“So, thank God for Bitcoin and other non-fiat currencies that transcend the irresponsibility of governments,” Lummis said. “Including our own.” She had purchased between $50,000 and $100,000 of the digital currency in August.
Tech pioneers traditionally congregate in cities rather than seeking a “home on the range.” But tech has found a foothold on the prairies as it becomes easier to meet with worldwide experts from the comfort of internet-connected homes and offices.
Adding some cement to the distinctive fusion of old-school ag and new-school tech, Wyoming has passed a raft of crypto-friendly laws in recent years that include a legitimization of crypto banking.
Among laws passed in Wyoming was one allowing for a new bank charter for Special Purpose Depository Institutions, or SPDI banks, pronounced “speedy.” In many ways, it’s a return to the Wild West: colonizing open space because it’s there. No chartered SPDI bank yet has customers.
The legislation that allowed SPDI banks heralded the coming digital turf war by talking up how crypto-connected deposits have been refused by the traditional financial system.
Caitlin Long is founder of Avanti, the second SPDI bank to obtain a Wyoming charter. The company raised $44 million to offer products ranging from a tokenized, “programmable U.S. dollar” to business services like Automated Clearing House transfers, which will be backed by in-house assets rather than an insuring entity like the FDIC.
But perhaps more importantly, Long set in motion the chain of events that led to Wyoming’s crypto laws when she tried to donate Bitcoin to her alma mater University of Wyoming and the state had no vehicle to accept the sizable donation.
Long is quick to compare the Johnson County War with the current battle for digital property rights.
“Can we digitally fence off our financial assets like fencing off the West to enforce property rights against trespassers?” she asked. “Our financial assets are trespassed upon every day due to market structure issues.”
Brokers, Long contends, have abused trust and enacted nearly invisible grazing mechanics in the traditional financial system that fatten their own herd of wallets. Most financial assets, she says, have been rustled by the traditional system to become IOUs rather than actual assets. Crypto banking will fix these and other problems, according to Long.
But the new technology also requires personal responsibility. She compares it to stashing cash in a digital mattress. Further, wherever money is, criminals will follow. That means that SPDI banks and crypto at large need to come up with monitoring and processes that prevent them from becoming a black hole of black-market transactions. Long said because of the distributed nature of reputable crypto’s ledger sheets, this has already helped put away would-be crypto criminals.
Problems and challenges aside, the digital land rush is on. But many question why it’s occurring in Wyoming.
“Why not Wyoming?” Long asked. “There’s zero advantage to physical location in a virtual industry.”
Mark Wilcox is a veteran storyteller from Jackson Hole, Wyoming. Most days, he helps business owners tell their stories better online. He and his wife live in northern Utah, where she homeschools their six brilliant children, one of whom published her first novel at age 11.