These days, the United States is politically divided into red and blue states, and they seem to be increasingly divided into crypto-friendly and cautious regions. On February 21, it was announced that Ripple Labs, based in San Francisco, was registered as a company from Wyoming. Wyoming is without a doubt the most inviting blockchain and cryptocurrency country in the United States.
Meanwhile, the public prosecutor in New York announced a few days later the results of the office’s long-standing investigation into the cryptocurrency trading platform Bitfinex regarding illegal activities. As a result, Bitfinex and its subsidiary Tether will have to pay $ 18.5 million in compensation to the state of New York and submit periodic reports on their reserves.
In other words, both Wyoming and New York, further from the cryptocurrency regulation spectrum, led the industry for a week. The irony did not escape Timothy Massad, former chairman of the US Commodity Futures Trading Commission and now a senior fellow at Harvard Kennedy School, who told the Cointelegraph:
“The federal regulation of cryptocurrencies is like Swiss cheese – full of loopholes – which means diversity across the state, with Wyoming luring cryptocurrencies in and New York’s attorney with tight controls, as we saw this week with Tether and Bitfinex.”
Whether this buffet is good is a difficult point. Crypto-ports like Wyoming could be centers of innovation that promote disruptive technologies, as Wyoming-elected U.S. Senator Cynthia Loomis confirmed this week in a panel discussion with the Digital Chamber of Commerce with Miami Mayor Francis Suarez, another cryptocurrency enthusiast.
But it also leads to regulatory ambiguity, which causes high blood pressure in entrepreneurs. “Our regulatory system is a complex structure of many state and federal agencies,” Stephen McCune, assistant professor of finance at the University of Oregon, told the Cointelegraph. He also stressed that they “need to coordinate actions on the issue of cryptocurrencies, because this asset class is clearly not related to the current organizational structure.”
When asked about Ripple et al., From a business perspective, a smart business move by enrolling in heat-coded states like Wyoming with a higher degree of regulatory trust and freedom – plus lower fees – McKeon added: “Businesses seek to suspiciously restrict “Moving to Wyoming is helping you reach that goal, so it’s a smart move.”
Others can subscribe to Ripple. “Several crypto projects left New York after the cumbersome implementation of BitLicense in 2015,” Zachary Kelman, managing partner at Kelman Law, told Cointelegraph. “I expect more projects to move to Wyoming, as well as other crypto-friendly countries like New Hampshire.”
Wyoming revolted in 2019 when the legislature approved the lease of specialized custodian institutions, or SPDIs, that can accept deposits and custodians, including cryptocurrencies. The State Banking Division itself has acknowledged that “many business development organizations are likely to place great emphasis on digital assets such as virtual currencies, digital securities and utility money,” although they can also handle traditional assets. However, SPDI institutions cannot provide loans like traditional banks.
Kraken Bank was the first company to receive an SPDI charter in Wyoming in September 2020, followed by Avanti Bank and Trust in October, and Loomis told the Digital Chamber of Commerce on February 25: “There are three more [SPDIs] under development . Action. Avanti founder and CEO Caitlin Long previously suggested that Wyoming’s SPDI would likely be the “solution to the #BitLicense problem” crypto companies face as “New York law exempts BitLicense national banks. ”
But even though Wyoming’s SPDIs are state-owned companies and not national banks, Long insisted that “federal law protects parity between national banks and government-owned banks,” and by that logic she concluded that the SPDI constituted a “passport to 42 US states.” Without the need for a license [encryption] additional case. ”
Is an accident waiting in the wings?
However, not all new specialty banks in Wyoming are blind. The Banking Policy Institute has suggested that Wyoming’s SPDI may be “a fluke waiting in the wings.” In September, BPI indicated that Kraken was “the first digital asset company in US history to receive a bank charter recognized as under federal law.