WYOMING – Sen. Cynthia Lummis and Gov. Mark Gordon both celebrated a new endeavor through the Federal Reserve that will open Wyoming’s growing blockchain development.
Gordon issued a statement after the Federal Reserve announced the opening of a comment period for proposed “Account Access Guidelines for the Reserve Banks,” which potentially paves the way for Wyoming-chartered special purpose depository institutions (SPDIs).
“Today’s announcement is encouraging news and the culmination of an extended effort where Wyoming took the lead,” Gov. Gordon said. “This was an unprecedented task and I appreciate the collaborative work that has occurred throughout the process. I’m committed to ensuring that Wyoming remains a national leader in the digital asset realm.”
Sen. Lummis joined Gordon in praising the Federal Reserve. She said she looks forward to working with the multiple governmental agencies in promoting responsible innovation in the American banking system.
“Today’s announcement from the Federal Reserve is a major step toward promoting responsible innovation in our banking system,” Lummis said. “The Account Access Guidelines recognize that access to our payment system is a privilege, not a right, and that there are basic safety and soundness standards that all banks, including Wyoming’s special purpose depository institutions, must meet. Wyoming has developed the United States’ best regulatory framework for digital assets and others are beginning to recognize this fact too.”
SPDIs are custodial banks for digital assets providing safety and accommodations to the capital markets. Wyoming’s digital asset framework is the first of its kind in the United States.
The Wyoming State Legislature has spent the past three years developing expertise in digital assets in hopes of being on the cutting edge of finance in the future. The Legislature passed HB 74 in 2019, which created depository institutions with the special purpose of accommodating business unable to access traditional banking services, including blockchain businesses. Additional state legislation has recognized digital assets as property, clearing the way for banks to act as cryptocurrency custodians.
The Federal Reserve issued a statement as well, noting the recent innovations in emerging technologies and financial delivery mechanisms. Federal Reserve Board Governor Lael Brainard said novel types of banking charters have been designed specifically to support these recent innovations.
“To facilitate these activities, some such institutions have requested access to the payments system offered by Federal Reserve Banks,” Brainard said. “To help achieve the goal of applying a transparent and consistent process for all access requests, as well as considering the ramifications for the broader financial system, the board is proposing Account Access Guidelines for the Reserve Banks to evaluate such requests. These guidelines take into account the board’s legal authority and reflect an analysis of its policy goals.
“With technology driving rapid change in the payments landscape, the proposed Account Access Guidelines would ensure requests for access to the Federal Reserve payments system from novel institutions are evaluated in a consistent and transparent manner that promotes a safe, efficient, inclusive and innovative payment system, consumer protection and the safety and soundness of the banking system.”
Public comments will be accepted for 60 days after publication in the Federal Register.
Cryptocurrency and blockchain technology has been a priority in the Wyoming State Legislature since the rise of Bitcoin. Recently, cryptocurrency has been best known for NFTs – non-fungible tokens. An NFT is a unit of data stored on the blockchain determined to be unique. That makes it non-interchangeable and valuable. Potential buyers’ interest in that item, just as with auction or non-auction sales in the traditional market, determines its value. NFTs can be digital items like photos, videos, audio and other types of digital files.
Of course, digital copies can be made of that image, video or digital file. NFTs are designed to give the buyer ownership of the work outside of the copyright and reproduction rights.
In terms of art, original works of art can fetch millions of dollars at auction. That’s similar to the NFTs’ value. While digital copies can be made, it’s the original work that garners the price tag.
Since few current banking institutions are equipped to deal with digital commerce on that scale, the Federal Reserve’s latest move would further innovation in banks to capitalize on that trade in commerce. And Wyoming has been one of the leaders in forming its framework, potentially making the state a welcoming location to these digital-led banks and the finances that pass through them.