By Sarah Pridgeon
Many tout it as the technology of the future, so new that the average person has trouble explaining what it is. But if the Legislature successfully passes a set of bills this month, says Representative Tyler Lindholm, Wyoming won’t just join in with the blockchain revolution, it will lead the way on the global stage.
“We essentially could be the blockchain capital of the world within a year from now – that’s a very realistic outlook as far as the sheer number of companies that have contacted us in the last week alone,” Lindholm says. “I don’t know if it’s going to be the answer to Wyoming’s deficit woes – but I don’t think it’s going to hurt.”
On hearing about the cryptocurrency-friendly bills that the Legislature has on the table this year, Lindholm and his allies have been contacted by dozens of interested tech companies. One from Nova Scotia, he says, simply upped sticks and moved to this state in anticipation of the change.
“It’s a really exciting time, this is the wild west of technology and those folks are looking for a home.”
Rise of the Cryptocurrency
Most people think of blockchain in terms of Bitcoin, the revolutionary form of currency that doesn’t depend on a central authority. It was born in the wake of the 2008 financial crisis, developed to remove the interference of banks and governments from the equation, but only recently came to wide attention when its rising value positioned it as the latest and greatest “get rich quick” scheme.
Bitcoin and its fellow cryptocurrencies are powered by the blockchain, a decentralized ledger system that is believed to be one of the most secure ways available to store information. Its possibilities are wide ranging, from storing private information in an unhackable environment to pooling the technology of users to power scientific research.
“It’s pretty fascinating what’s being done with blockchain,” Lindholm says. “IBM has adopted it, UPS is looking at implementing it, Vanguard Mutual is looking at picking it up and the list goes on of all the Fortune 500 companies that are starting to pick this technology up. It’s unhackable, and a big concern is how to protect their data nowadays.”
Lindholm says he has seen the writing on the wall for some time and ran legislation in 2016 to fix a loophole issue with cryptocurrencies. It failed to pass.
“All of a sudden, in 2017, it became really important to a lot of people – I heard from some ranchers who were trying to buy Bitcoin because the prices were awesome and it was a solid investment that they wanted to try and make,” he said.
“Unfortunately, Wyoming is one of three states in the nation, along with Hawaii and Minnesota, that have a bad regulatory system where basically these cryptocurrency exchangers will not operate here. We’ve got some bad laws in that regard.”
It’s not illegal to buy, sell, own or even mine Bitcoin, he says, but no exchanges want to operate in Wyoming thanks to the state’s regulatory set-up. House Bill 19 would fix the regulatory issue, but it’s not the only idea Lindholm is spearheading this session.
A New Industry
At the present time, Lindholm says, no state or country has managed to put its arms around creating an environment in which a blockchain company would be pleased to operate.
“We’ve got basically 100-year-old laws with regards to our corporations that say you’ve got to keep paper copies on hand at the place you operate. That’s kind of tough for a lot of these companies that exist essentially all online.”
Tech companies have been asking for a solution, he says, and it might be found in House Bill 101, which would give companies the option to store inter-office documentation on a private blockchain.
“We’ve got another another one in regards to Initial Coin Offerings (ICOs), which is a new way to raise capital for a start-up company,” he says.
“There exist no regulations on them whatsoever – here, anywhere in the U.S., nor the world.”
Blockchain start-ups have been asking for guidance as to what they can and cannot do with ICOs, so Lindholm spoke with industry experts and put together legislation. Since House Bill 70 was released, he says, the tech sector has already started taking an interest in Wyoming.
“They’re already registering, just on the premise that we’re looking at this piece of legislation. Several companies already registered, several have already started looking at leasing office space – it’s pretty incredible how fast it moved,” he says.
“We might have found a whole part of the tech sector that’s looking for a place to call home. It’s a completely legal enterprise, it’s just capital fundraising at a different level than what everybody is used to, but it’s growing so fast.”
Another bill on the table this year increases opportunities to file an organization in Wyoming – another one that has attracted excitement, he says.
“I’ve been contacted by organizations in Canada, Scotland, the Phillipines – folks are really pumped about it and, I’m not going to lie, a lot of that shocked me,” he laughs.
Diversifying the Economy
If Wyoming passes these bills, Lindholm says, it would position itself as the global leader in blockchain regulation. While others are looking at the technology, none have figured out what to do with it.
“States are starting to dabble and there are several states out there with blockchain legislation this go-around. I got a pretty good chuckle at some of them, because all of them have to do with intergovernmental operations,” he says.
One state, for example, is looking at legislation so you can pay your taxes with cryptocurrency; another is looking to put driver’s license information on a blockchain.
“These things only help government operate more efficiently, which is not a bad thing, but in Wyoming’s economy, where we’re looking to diversify, there’s a reason why we’re looking into making Wyoming more appealing for the tech sector instead of making our government more appealing.”
Within these bills lies the potential to pull companies from tech hubs like Silicon Valley, Lindholm says.
“Nobody in the world has even tried this – Congress hasn’t even tried. We would be the very first in the world,” he says.
“They’re starting to realize that not only is Wyoming passing this legislation, we’ve got built-in infrastructure that already is really appealing, based on the premise of no corporate income tax, extremely private LLCs, wide open space, low energy costs. The low energy cost is extremely important to them because they are running a bunch of high end computer equipment.”
Giving the state a more enticing regulatory atmosphere goes right alongside the wide open spaces, low population and scenery in attracting new industry to Wyoming, he says.
“We’re bringing in a new technology and diversifying the economy, which I think everybody agrees we should do,” he says.
Leading the Way
Lindholm has been working with the Wyoming Blockchain Coalition, which he says includes support from former governors, former UW presidents, deans from the university and legislators. The ideas have a wide range of support in both houses, he adds.
“Everyone has been all-hands-on-deck and I’m just the lucky guy who gets to be prime sponsor on it,” he smiles.
“The best thing about it is that every one of those pieces of legislation costs the taxpayer zero. All it’s doing is allowing private business to do something they want to do and allowing people to operate in a regulatory framework they’re supportive of. It costs us nothing to do and it might bring a lot of revenue to the State of Wyoming.”
If the buzz continues, Lindholm says, Wyoming could see an influx of new businesses in the near future. With cryptocurrencies, he believes the state may be looking at a new opportunity to follow the mantra of, “if you build it, they will come”.
“It’s here and it’s one of those things we have to get on top of if Wyoming wants to keep pace with technology,” he says.
“If we can bring in revenue for the State of Wyoming without costing the taxpayer a dime, and bring in jobs? That’s as good as it gets.”
The big issue on the table at the upcoming Legislative Session will once again be school funding, says Representative Lindholm. He wasn’t too surprised by the results of the school recalibration study, he says, though he didn’t necessarily agree with the conclusion that teachers are being paid too much.
“I don’t think that’s ever been a thing,” Lindholm says. “I’m proud of the fact that Wyoming does pay our teachers more than surrounding states.”
He notes that this is partly why we have a fair number of teachers from outside Wyoming and that, in the future, it may be a good idea to increase incentives for teachers to move to this state.
But while the study’s findings that Wyoming isn’t spending too much on education (and may, in fact, not be spending enough) didn’t shock him, the lack of action from the School Recalibration Committee did.
“At their last meeting, the School Recalibration Committee decided to take no action as far as any efficiencies or a reduction in money or anything like that – they didn’t actually do anything with regards to that study, and there are a lot of us who feel that was a waste of money and time,” he says.
“The [Joint Revenue Committee] chairman publicly stated that, if the recalibration committee is not willing to hunker down on any changes…there is no need for any of those additional revenue bills.”
Still remaining on the table, however, are “sin tax” bills on tobacco and alcohol. Several other options to handle school funding are also out there, he says, including two constitutional amendments.
The first amendment is sponsored by Senator Ogden Driskill and co-sponsored by Lindholm and would make it mandatory for Wyoming to look at all the surrounding states and make Wyoming move to within 110 percent of the average of those states.
“If we looked at that now, it would lower funding by right around $2000 per pupil, so it’s a pretty significant cut to education,” he says.
The second potential amendment would require a mandatory tip-over from the permanent mineral trust fund, using all the interest gained on that fund for the next six years to make up the deficit in education funding.
“I still think there are efficiencies that can be found with regards to our school funding, and that’s something I would like to concentrate on at the same time,” he says.
Other issues that may be discussed at the session include the fact that, while the Legislature has the statutory right to dictate salary levels for school employees, it is not currently doing so for superintendents. There is statutory language setting a limit for superintendents, he says, but around one third of school districts are paying over that limit.
Meanwhile, Lindholm hopes that the lack of action from the recalibration committee indicates they are studying the results more closely before selecting a direction. He commends both Crook and Weston County’s school districts for being among those in the state that are focusing on efficiencies and addressing the funding issue wherever possible.
“I don’t know that I could be more proud of those guy for finding those efficiencies, putting them in place and keeping the schools operating at a level that is still the same as before the cuts,” he says.