As federal and state regulators ramp up investigations and enforcement actions against cryptocurrency companies, Wyoming continues to demonstrate that regulators and businesses can form dynamic, effective partnerships to foster innovation while ensuring consumer protections. Regulating blockchain too tightly or decrying its use because of some bad actors fails to acknowledge the tremendous power of this technology, and risks undermining U.S. leadership in this vitally important industry by forcing businesses to overseas jurisdictions with a more productive regulatory atmosphere.

Federal Regulators Offer Hostile Comments and Actions Against the Crypto Industry

On September 21, in an interview with the Washington Post, U.S. Securities and Exchange Commission (“SEC”) Chairman Gary Gensler reiterated his stance that blockchain is a market “rife with fraud and abuse and hucksters and the like.” The same day, Michael Hsu, the acting Comptroller of the Currency (“OCC”), while speaking to a blockchain industry group argued that “innovation for innovation’s sake [...] risks creating a mountain of fool’s gold.”

These comments immediately followed reports from Messari’s Mainnet conference in New York City that the SEC had served a subpoena on one of the speakers prior to participating on a panel. Messari’s CEO Ryan Selkis was particularly frustrated because the company had “offered to cop a ton of passes for regulators and congressional staff that wanted to learn more about crypto,” but received little to no interest.

Wyoming Takes a Different Approach

Hosted by the University of Wyoming, the 2021 Wyoming Blockchain Stampede was a four-day conference “covering major blockchain themes such as, sources, impact, and implementation that look to unite worldwide participants with thought leaders, legislators, and changemakers at the forefront of major impacts to the world’s future in blockchain technology.” The conference featured multiple events covering every aspect of the blockchain ecosystem including startups, law, business, and finance.

In contrast to unfriendly comments and actions from federal regulators, the Wyoming Blockchain Stampede[jp1]  showed how regulators can work with industry leaders to promote innovation and generate valuable business opportunities in the blockchain and cryptocurrency space.

The difference in approach is particularly evident because at the Mainnet conference there were no state or federal regulators that were speakers, whereas Wyoming’s state regulators and government officials were a key part of the Blockchain Stampede’s programming.

At the Wyoming conference, it was easy to have candid, productive discussions with Wyoming’s chief regulators such as Albert Forkner and Nick Rotchadl of the Wyoming Division of Banking who were accessible, friendly, and excited to work with entrepreneurs on facilitating their passions through the state’s regulatory framework. This stands in sharp opposition to the hostile approach from federal regulators and their state counterparts in New York where the Mainnet Conference was held.

For the first two days of the conference, Wyoming’s Select Committee on Blockchain, Financial Technology and Digital Innovation Technology met to discuss pending legislation and receive testimony from industry leaders, educators, and citizens. In contrast to other states, the Committee has incorporated industry leaders such as Caitlin Long of Avanti Financial Group, Matthew D. Kaufman of Hathaway & Kunz, LLP, and Joel Revill of Two Oceans Trust as liaisons who provide key legal and industry expertise to the Committee’s proceedings.

Whereas partisan conflicts have roiled the debate over blockchain at the national and state level, Wyoming has adopted a more productive, bipartisan approach. For example, although the Wyoming legislature is undoubtedly dominated by Republicans, the Republican President of the Wyoming Senate has appointed Chris Rothfuss, a Democratic State Senator and Minority Floor Leader, as the co-chairman of the Select Committee.

Although there will always be disagreements over policy matters, the proceedings of the Select Committee and votesover pro-industry laws have been distinctly productive with little partisan rancor. During the conference, there was a distinct sense that members of both parties recognized the tremendous productive power of blockchain and worked together to tap that potential to bring jobs and opportunities to the people of Wyoming.

Can Federal Regulators and Other States Learn from Wyoming’s Experience?

The blockchain industry in Wyoming began with humble origins as ranchers in the northeastern part of the state sought to use blockchain technology to track cattle, but has now exploded into one of the Cowboy State’s key economic strengths.

The central factor to this incredible economic boom is the unique, productive environment that Wyoming regulators and legislators created. Rather than seeing blockchain companies as “hucksters and the like,” Wyoming regulators assume that blockchain companies are operating in good faith while making sure that consumers are protected.

It is clear from Wyoming’s experience that regulators can work proactively with the blockchain industry, but it is yet to be seen whether others will follow Wyoming’s lead.

For future updates on developments shaping the new Crypto Frontier, be sure to follow the Tacen Regulatory Corner.