CHEYENNE – A bipartisan group of Wyoming legislators has put forth a bill that would change the way the state treats cryptocurrencies, such as Bitcoin.
House Bill 26 would amend the Wyoming Money Transmitter Act to define digital currency as a permissive investment. That means cryptocurrencies would be treated the same as U.S. dollars, Euros or any other currency when dealing with monetary transfers.
The bill’s main sponsor is Rep. Tyler Lindholm, R-Sundance. Lindholm said the best way to explain what the bill would do is to consider the current rules for transferring money using a company like Western Union.
“If I was going to send you $100 via Western Union, the Wyoming Money Transmitter Act requires Western Union to have $100 in cash reserves, so they have a backup if they lose my money somewhere along the way,” Lindholm said.
But what if you wanted to buy something using a service like PayPal, and you wanted to pay with Bitcoin instead of dollars? Under the state’s current interpretation of the law, PayPal would need to have the corresponding amount of Bitcoin in reserves, in addition to dollars.
In other words, if you wanted to buy $100 worth of product in Bitcoin, the company making the transaction would need $200 in reserves to cover the transaction – half in Bitcoin, half in dollars.
“With Bitcoins, they’ve got to do double what anybody else does,” Lindholm said. “And for that reason, several institutions have refused to do business in the state of Wyoming.”
Bitcoin is the most prominent cryptocurrency, but there actually are more than 650 such currencies available for trade in online markets. Lindholm describes them as a sort of hybrid between fiat currencies like the U.S. dollar and precious metals like gold or platinum.
Like fiat currencies, Bitcoins and other digital currencies base their value on trust in the system instead of any specific backing commodity. But like precious metals, Bitcoins are finite; there is an upper limit to the number of Bitcoins that can ever be produced.
Bitcoins are created using a decentralized process called “mining,” where individuals process transactions and secure the decentralized Bitcoin network using specialized computer hardware. In exchange for that service, they collect new Bitcoins, or fractions of new Bitcoins.
“In terms of the mathematics behind it, it’s absolutely fascinating,” said Sen. Chris Rothfuss, D-Laramie, one of HB 26’s co-sponsors. “It’s certainly not a system I would have 100 percent confidence in – I don’t want all my money in Bitcoin, that’s for sure – but from a policy standpoint, for the state of Wyoming to treat it differently than any other currency holds it back.”
Despite wide swings in value, Bitcoin has seen increased usage in online transactions. And for that reason, Rothfuss and the other co-sponsors of HB 26 believe it and other cryptocurrencies deserve a fair shot in the Equality State.
“The legislation we’re providing doesn’t do an awful lot other than try to provide that level playing field,” Rothfuss said. “In my view, it needs to be treated the same as a ruble or a Euro, or any other currency.”
Lindholm said HB 26 makes good business sense, given that the current state law has already caused some Bitcoin-friendly businesses to pull out of Wyoming.
“That’s actually how I found out about it; I was going through my Facebook feed and a friend from Casper brought it up,” Lindholm said. “A business called Coinbase let them know they could no longer operate in the state because of the regulations.”
Lindholm concedes that the nature of Bitcoin may make it difficult to explain to fellow legislators who are unfamiliar with it. But he’s hopeful he can get HB 26 past the two-thirds majority threshold needed for successful introduction in the House of Representatives in a budget session.
“I’ve got two minutes to introduce the bill for the introductory vote, but essentially this is about keeping equal opportunities between currencies,” Lindholm said. “A big reason for me pushing this bill is that we don’t want to run businesses, especially emerging technologies, out of Wyoming.”