By Chrissy Suttles
Wyoming Tribune Eagle
Via Wyoming News Exchange
CHEYENNE — Two influential bills drafted by the Blockchain Task Force passed the Wyoming House of Representatives on Tuesday.
House Bill 74, which would help create a special depository bank free from FDIC oversight, passed 52-7, with one excused. House Bill 70, which asks the Wyoming Secretary of State's Office to build a blockchain-based business filing system, passed 31-28, with one excused.
Both bills are aimed at making Wyoming friendly to emerging and sometimes controversial industries.
House Bill 74 could establish the state's first special-purpose depository bank for companies struggling to maintain accounts.
This includes blockchain, cryptocurrency, firearm, and oil and gas companies, which, according to some, are often discriminated against by traditional banks.
Task force members say banks sometimes turn these companies away due to uncertainty about the source of income.
"This is signature legislation," task force member Caitlin Long said. "Companies in this industry have had a terrible time obtaining bank accounts and keeping them open once they have obtained them."
Long said an initiative called Operation Choke Point is partially to blame. From 2013-17, the United States Department of Justice investigated banks doing business with "high-risk" companies like firearm manufacturers and payday lenders.
As a result, startups have gone out of business because they lost access to a bank account, Long said.
Pat Slyne, a University of Wyoming graduate, spoke in favor of the bill during a Joint Minerals, Business and Economic Development Committee meeting. He said three Wyoming banks recently rejected an account for his startup.
Joseph Pitluck, CEO of co-working space company Free Range, said his bank account was closed once he became involved in the blockchain industry.
"We don't feel that we're competing with Wyoming banks at all," he said. "We'd actually like a collaborative relationship."
The new bank, a corporation under the Wyoming Business Corporation Act, would be one of the first of its kind in the country, allowing companies to form a communal bank funded exclusively by members.
Those who join would be required to maintain insurance or bonds covering operational risks, as well as a minimum of $5,000 in deposits each.
But Michael Geesey, executive director at Wyoming Bankers Association, said he wouldn't consider this institution a bank at all, and said his organization strongly opposes it.
"We don't see this as a bank," he said. "Banks do two things: They collect deposits and do loans. By law, this would not do loans. This is a cryptocurrency exchange, and we need to call it what it is."
The bank would not hold cryptocurrency itself, but would allow these traders or investors to keep their money in the bank.
House Bill 70 would ask the Wyoming Secretary of State's Office to implement a blockchain-based business entity filing system that would run parallel to the office's existing program.
Original drafts of the bill mandated the office do this in a certain amount of time, but an amendment made by the Minerals Committee gives staff more flexibility.
Now, the office may implement the new system, but isn't required to. The bill allocates $1 million in general funds for development.
Before it was amended, Secretary of State's Office staff said the bill's "aggressive" timeline was unrealistic and unnecessary.
"Our business filing system does more than data storage," said Deputy Secretary of State Karen Wheeler.
"It's a state-of-the-art, complex system that is created to stay current with changing technology, statutes and processes."
The more secure interface would appeal primarily to companies vulnerable to data-driven lawsuits, according to Rep. Tyler Lindholm, R-Sundance. Wyoming could also compete with states like Delaware and Nevada for business registrations.
"This information would be time-stamped and immutable," Lindholm said. "It would allow large corporations to file quicker, and would help those that find themselves in court.”