Wyoming State legislator Tyler Lindholm R-Sundance, also a co-chair of the government’s blockchain committee, sees big business opportunities arriving for banks in Wyoming if and when they transit into “special depository institutions” and adoption of blockchian.
Lately, this Midwestern state in the United States has been framing legislation which will legalize currency transactions and the storage of currency online.
Lately, governments have been pursuing blockchain technology legalization to drive businesses as they foresee the vast advantages that decentralized ledger technology offers. Apart from transparency for ongoing transactions, it also does away with the need for a third-party arbitrator or ledger-keeper for each level of the transactions.
Lindholm’s Money Warehouse Dream
In the latest draft legislation, Lindholm and his team are proposing a new type of institution, which is unlike traditional banks and permits the opening and operation of bank-like accounts specifically for cryptocurrency. However, the bottom line of this piece of draft legislation is that such accounts will be regulated by the government or agencies appointed by the government.
Currently, in traditional banks, businesses which work with cryptocurrency clients or pay for services themselves in this non-fiat currency are subject to unnecessary review and abnormal processing. Hence, to fill the demand for crypto-specific “bank” type institutions, Lindholm and his panel are encouraging the setting up of these new era institutions.
Bank owned, Bank operated
The special focus of this legislative proposal is that the new bank will have a “co-operative” ideology and the ownership, operations, and insurance will be the prerogative of “members” who are appointed by the larger body of professionals of the industry.
Such banks will not have the power to issue loans and will be subject to harsh regulatory norms administered by the state’s financial watchdog Division of Banking. These banks will operate separately from the overarching Federal Deposit Insurance Corporation which covers all risks faced by banking customers in the traditional sector.
Global Crypto Laws
Wyoming’s legislators have important lessons to learn in framing their laws from other countries, including trading regions which have adopted blockchain technologies such as Malta, Switzerland, Japan, Estonia, South Korea, and Russia for integration in mainstream commerce.
Lindholm insists that the Wyoming crypto-banks will include a key and most probably critical factor, learnt from the lessons of the Great Financial Crisis of 2008-9. The crypto-banks will have to stringently maintain “100 percent ratio of crypto–to-liquid funds.” These will have to be in the form of bank investments or as cash. Such a compulsory reserve in equivalent value is seen as a measure to prevent money laundering as well as fraud.