He likes beef. He likes blockchains. He’s the co-owner of BeefChain.
Tyler Lindholm is Wyoming’s blockchain cowboy. A cattle rancher, husband, and father of four, Lindholm is a three-time state representative and co-chair of the Wyoming Blockchain Task Force.
“I’m probably the geekiest cowboy you’ll ever meet,” he says, in exactly the sort of Western twang you’d expect.
And, for the last two years, the Blockchain Cowboy has had one, singular focus:
“I’m going to make it so goddamn expensive to do business outside of the state of Wyoming, that [blockchain companies] don’t have a choice but to come to Wyoming.”
Lindholm shoots straight. And on blockchain, he doesn’t miss.
The state rep has gone a perfect 13 for 13 on blockchain bills—passed and signed into law with bipartisan support across the board. The result is a legislative oasis of blockchain-friendly laws in an otherwise vast desert of regulatory uncertainty.
Three years ago, no one could have seen this coming. Wyoming was widely considered one of the worst states in the country for all things related to blockchain and cryptocurrency. Its money transmitter laws, at the time, made it so cryptocurrency exchanges wouldn’t come anywhere near the state, Lindholm says.
Now, Wyoming has arguably become theblockchain state—a Malta of the West. And crypto companies, big and small, have taken notice.
FreeRange, a New Mexico-based startup, recently announced plans to take advantage of Wyoming’s newly minted laws and make the move—it aims to become the nation’s first state-chartered digital asset bank.
ConsenSys (Decrypt’s financier), which has been instrumental in Wyoming’s blockchain progress, says Lindholm, has also expressed interest in domiciling a legal entity or two in the Cowboy State. Kraken CEO Jesse Powell has made a few trips out to the Rocky Mountains to see what’s shaking. Cardano is already on its way to Wyoming—and the list goes on.
“Those types of organizations, they’re the goal,” says Lindholm. “That’s the girl I want to date. That’s who I want.”
But “legal entities” aren’t enough for him.
“And here’s the deal, too. I don’t just want you domiciling; I don’t want you just registering your business here. I want your jobs. I want you to buy property. I want you to send your kids to our schools.”
There are three blockchain bills in particular, he says, that have been instrumental to his mission of carving out a new Silicon Valley in the Rockies.
The Utility Token Act, signed into law in March 2018, came first—and it set the stage for what Wyoming would later be able to accomplish through its blockchain legislation, he says.
“It was six months before session, and Caitlin Long [Wyoming Blockchain Coalition advisor], myself, and our friend Rob Jennings [co-founder of BeefChain], and the guys from ConsenSys and some attorneys out of New York, we’re all on a conference line. And this is, like, October , and we’ve just gotten done with the Electronic Corporate Records Act and what we were gonna do there, and we still had, like, six months to go before session.”
They got to thinking.
“What would be something really crazy that we could do? And Caitlin mentioned, well, what if we handled this whole ICO situation, and differentiated it and talked about utility tokens versus security tokens in law. And, immediately, the ConsenSys guys and the New York guys were like, well, that’s never going to happen.”
“So, I was like—well, now it is,” he says with a laugh.
“Those are the fun ones. Everyone wants to run a fun one, especially if you can get it done. And it was crazy—we got it done. It was nuts.”
After that, the bills kept rolling in, and suddenly it all didn’t seem so crazy anymore.
The Special Purpose Depository Institution bill came later, and it’s another major one, he says—the very same law that FreeRange plans to use later this year to build its FDIC-insurance-rejectin’, 100-percent-asset-reservin’, state-sanctioned crypto bank.
It “directly kicks the gravestone of Alexander Hamilton, which I’m super excited about,” says Lindholm.
He doesn’t really hate Hamilton. But the Founding Father got some things “very wrong,” he says—like fractional reserve banking.
“To charter a bank that has a 100 percent reserve requirement speaks directly to the direction that I think a lot of people want to move towards. The fact that your assets are your assets and you can totally trust that they’re going to be there at any time—it’s a very principled movement.”
As a Republican with a “libertarian streak,” the economics of bitcoin and crypto are as appealing as the tech itself to Lindholm.
It also means he doesn’t like his state being told what to do—which is exactly what happened when the Uniform Law Commission sent Wyoming lawmakers a not-so-friendly letter a month ago, right as legislators were getting ready to pass arguably their most important blockchain bill yet.
The Digital Assets Existing Law, despite the dull name, packs a serious punch. First, it provides a legal framework for “qualified custodianship” of digital assets for institutional investors under SEC rules—a hill nobody had yet tried to climb, Lindholm says. “We’re really excited about that, as far as what that can bring in—institutional type investors, some of the bigger players in the game.”
And, in another first—and perhaps even more importantly—the law sets crystal clear, individual property rights for the holders of three types of digital assets: a digital security (investment contracts), a digital consumer asset (consumer tokens), and virtual currencies (bitcoin, ether, and the like).
In doing so, the law codifies the sacred mantra of crypto lovers around the world: “It’s your keys, your coins. That’s the biggest takeaway from that law,” says the state rep.
But the Uniform Law Commission wasn’t having it.
Their letter essentially demanded that Wyoming cease and desist with its bill, urging lawmakers to instead force all crypto holders—average bitcoiners and institutional investors alike—to use a “qualified custodian” in order to be protected by the law. “They didn’t engage with us at all during the summer, and all of a sudden they’re going to show up and say, ‘use our model act that [stipulates] you have to use an intermediary to own your assets.’”
“That’s bullshit. That flies in the face of everything that cryptocurrency is.”
In the end, Wyoming passed the law it wanted. But the ULC hasn’t let up. It’s now set its sights on other states—such as California and Nevada—which are currently moving forward with similar laws, urging them to reject the Wyoming model and adopt its recommended framework.
Federal agencies, commissions, regulators—they don’t normally take too kindly to state legislators stepping on their toes. So what about the SEC?
Yeah, they don’t like it either, says Lindholm. But the Blockchain Cowboy says his answer to that commission will always be the same: “You had your shot.”
“I would say they’ve done a horrible job so far,” he says. “They need to get caught up. It’s 2019. This stuff has been in place for 10 years now. You know? 10 years.”
Wyoming was the first state to exempt the sale of certain kinds of blockchain-based tokens from securities laws, but the strength of its Utility Token Act currently remains mostly symbolic.
“This is native Internet technology,” explains Matt Corva, ConsenSys general counsel. “Nothing can really be confined within state boundaries. It’s very difficult to do that.” And once these digital assets cross state lines, the interstate commerce clause kicks in, and federal laws will apply.
“For the Wyoming laws to have a real impact, they need to influence the federal law—or they need many other states to follow suit, which I think we’re seeing,” Corva says. “The best possible use for the state laws at this point are to influence and force federal policy to come through.”
Lindholm agrees. He says the SEC has only itself to blame for “states going rogue.”
“The SEC has how many attorneys? And how many staff to be able to work on positive regulations and guidances that could have paved the way for this?”
And if regulators at the SEC think their problems end with Wyoming, “they are sorely mistaken,” he says. “Colorado just adopted our [Utility Token Act]. Arizona, last year, adopted our law. And the list goes on. Missouri’s got the bill now. It’s going to spread.”
While it would be nice to see the “federal government actually do something progressive” on blockchain and cryptocurrency, Lindholm says it’s likely up to the states to lead the way.
In the end, maybe that’s how our republic is supposed to work, he says. State by state, slowly but surely, progress is made.
Still, the fact that other states are now following Wyoming’s lead is “bitter-sweet” for Lindholm. After all, the Blockchain Cowboy wants nothing more than your crypto startups in his backyard.
“I’m like, hey, look at them, my bill’s being copied. That’s great.”
“Shit. I hope they don’t pass.”