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Over the past few years, Wyoming has created some of the most interesting laws in the country for creating blockchain and cryptocurrency companies in our state. But by allowing laws to be shaped and written by those who benefit from them, our hard legislative work has accomplished everything the blockchain industry wanted but nothing the state needs. That is, jobs and income.
Blockchain technology, a chain of digital records that should be nearly impossible to manipulate, offers a way to track ownership of a product over time. For example, a cow gives birth, the newborn eats Wyoming grass, is transported by truck to Nebraska, and ultimately ends up in a hamburger at an Orlando drive-through. With the blockchain, we can know the history of that Whopper, and if it contains E. Coli, it could be useful to the CDC.
The cryptocurrency uses blockchain technology to create new forms of digital currency, such as the famous bitcoin, where once again, the ownership and value of unique digital currencies are considered almost impossible to manipulate.
It’s a booming industry, and cryptocurrency fans cite South Dakota’s experience with credit card laws as an example of how attracting the financial sector through favorable laws and regulations can help Wyoming.
In the late 1970s, Citibank was losing huge sums on credit card transactions because it couldn’t charge a high enough interest rate.
Lawmakers in South Dakota, a financially listening state, realized they could solve the Citibank problem by drafting regulations that would allow a South Dakota bank to charge anything it wanted to a customer in Los Angeles. Knowing this, South Dakota Governor Bill Janklow told Citibank he would get the legislation he wanted, but only if Citibank promised to move at least 400 credit card processing jobs to South Dakota. Citibank agreed, along with Bank of America and others, to eventually create 20,000 high-paying jobs for the state.
But unlike credit card processing, blockchain doesn’t open envelopes, answer phones, or process checks. Instead it stores data on microchips which continue to become cheaper and easier to read from anywhere in the world. Blockchain doesn’t create many jobs and the few that create appeal for the type of workers who want to live in London, not Rock Springs.
Consider Kraken, the first company to take advantage of our new laws. The company has domiciled its banking operations in Wyoming with great confusion. But renting a post box in Cheyenne doesn’t create jobs for former Trona miners or railroad workers. Today, the Kraken website lists over 100 job opportunities in cities like London, Singapore and San Francisco, as well as many remote opportunities. Of all these jobs, only one is listed in Wyoming and in bold the question states: “Moving to Wyoming is an option.”
In addition to insisting on jobs, South Dakota was not afraid to charge companies a fair price in exchange for a favorable business climate. Like Governor Janklow explained, “We had a 5% tax on the profits of these companies. They make $ 500 million, we get $ 25 million. That’s a lot of money in South Dakota.”
If Janklow and the South Dakota legislature were going to create value for banks in New York, they wanted something in return.
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But unlike South Dakota, Wyoming let the industry write the legislation and they chose not to get paid. As co-founder of the Wyoming Blockchain Coalition Caitlin Long, (who also founded her cryptocurrency start-up Avanti), helped write the legislation.
In her article for Forbes, Long brags about Wyoming: “Basically, there aren’t any [fees or taxes] at the state level, in most cases! … At the state level, Wyoming has no personal income tax, no corporate income tax, and almost none of the other “gotcha” taxes that frequently affect companies domiciled in other states of the United States, such as franchise taxes or taxes on gross income. ”
Unlike South Dakota and its cunning governor and state lawmakers, we forgot that the goal wasn’t to help billionaires in California or Teton County, but to help Wyoming’s everyday communities.
Today we are one of a dozen states that have passed favorable legislation for blockchain and cryptocurrency companies, which means that our only advantage over those other states is that we ask for nothing in return, neither jobs nor income. It might be great for blockchain companies, but it’s not good for Wyoming families.
Which will do nothing to help Governor Mark Gordon offset $ 500 million in spending cuts to reach our schools, the streets, the health system and those workers in need of retraining.
Don’t get me wrong, I think there is a good chance that some people will make a lot of money from our legislation, but it won’t be the people who live in Rawlins or Evanston.
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