LARAMIE — Some of them weren’t wearing shoes, marked amid a polished crowd by their unkempt hair and wrinkled T-shirts.
Some were worth millions of dollars and looked like it, wearing designer jackets or donning the standard-issue uniform of California’s Silicon Valley: white T-shirt, sensible jeans, fleece Patagonia vest. A select few were both: new-school money with a look more befitting one of Ken Kesey’s Merry Pranksters than a pioneer of modern finance.
Yet here they all were, rubbing shoulders in the sleek, glass-lined corridors of the University of Wyoming’s Engineering and Education Research Building earlier this month at the second annual WyoHackathon — all hoping to build a future in Wyoming that several years ago was just a glimmer in the eye of House Majority Whip Tyler Lindholm, R-Sundance, and his industry-supported Blockchain Task Force.
Over a three-day span in Laramie, an eclectic crowd ranging from executives at major companies to school kids from Shoshoni intermingled. Some looked for new employees; some looked for ways to make their next million.
Among the attendees were names like crypto-pioneer Charles Hoskinson (net worth $500 million), Jesse Powell (CEO of the world’s largest cryptocurrency exchange) and former Cambridge Analytica executive Brittany Kaiser — a recent Wyoming transplant who is now a leading voice in the state’s burgeoning crypto-economy. Word of what Wyoming has done has spread so fast and so far, Lindholm said, that even the House of Liechtenstein — the ruling family of the diminutive, central European financial powerhouse — has expressed interest in their work.
“Two years ago when I first started doing all this stuff and working on these bills, I would have never imagined — never — that two years later, we’d be having these types of companies looking into Wyoming,” Lindholm said. “Charles Hoskinson — IOHK — that’s a Wyoming company now. I mean, this is working. We just have to keep the momentum going.”
Since starting down this road several years ago, Lindholm has shepherded — or bulldozed, depending on how you see it — numerous bills with industry input in an effort to help Wyoming capture the spoils enjoyed by the key players in the world’s “other” economy: the once lawless world of cryptocurrency, blockchain technology and code.
For Lindholm, the imperative has always been on economic development — generating new wealth for a state that desperately needs it for as little cost as possible. But some have been questioning when that money will begin rolling in.
“One of the big questions I keep getting asked is, ‘Tyler, why aren’t we seeing all this revenue yet?’” Lindholm said. “I think we’re right on the precipice, that we’re getting close, but we need to remember that even a private company starting up is not going to see a huge return on investment right away. Wyoming’s investment in this space is zero right now, and we’ve already seen a return on that investment with all the companies moving their businesses here, redomiciling and all that. I think it’s fair to say in nine months to a year, I think we’re going to see that wind shift right away.”
Others have wondered about the hidden costs that could come from opening the state to a world that few centered in brick and mortar understand.
Wyoming — fresh off an election year rife with dark money electioneering campaigns and several years removed from its role in the Panama Papers scandal — has doubled down on its generous corporate filing laws, with an eye of outgunning even Delaware as the undisputed king of LLC law. Even Nevada, renowned for its friendliness to businesspeople seeking to keep a low profile, is starting to lose ground to Wyoming, with costlier filing fees and a regulatory structure that could in some cases reveal the disclosure of the individuals behind those anonymous LLCs.
“People who want to invest in the United States discreetly come to Wyoming,” Bob Cornish, a well-known securities attorney, said Sept. 21 during a presentation in Laramie.
Some people leery of blockchain and cryptocurrency may have found their fears substantiated while sitting in on the various panels held throughout the conference. One featured people worth hundreds of thousands of dollars learning how to avoid paying taxes on capital gains using designated opportunity zones to start new businesses. In another panel, attendees learned about the advantages of setting up their businesses in certain jurisdictions around the world, and how Wyoming’s law offered protections that would allow business operators to avoid their names being revealed should their companies ever be sued.
The world of blockchain and cryptocurrency is guided by a very libertarian ethos — one that for many is defined by a dream of undermining a financial sector they see as too regulated, too tight-fisted, too favorable to corporations. Its inhabitants yearn for a freedom and control that, for ages, has long been open only to the world’s most elite class of investor.
To some, this is a threat, leading mainstream thinkers like Financial Times’ chief economics editor Martin Wolf to declare the transfer of wealth from fiat currency to crypto would “transform (and surely destabilize) today’s monetary system, in which the state seeks to guarantee and regulate a money supply largely created by private banks and backed by private debts.”
Others, however, see the rise of technologies like crypto and blockchain as a wellspring of possibility, a way to make money fast and, in some cases, invest it back into economies that desperately need it. In one panel Saturday, Christopher Flint, a managing firm with NYC-based cryptocurrency and venture firm Maha Advisors, discussed ways investors could use their profits from cryptocurrency to invest in opportunity zones or other brick-and-mortar entities to maximize their profits, and create physical wealth beyond crypto.
Flint called for a sort of “second wave” of entrepreneur, a means of generating massive wealth that — in the spirit of the ‘80s — can then “trickle down” from the venture capital firm to the investor level and, finally, the small businesses themselves.
“The big problem is education,” he said. “Getting people to realize this is a once-in-a-lifetime opportunity.”
But with the freedom to make that innovation happen also comes the risk of opening the door to being taken advantage of. Lindholm is well aware of the risks, saying in an interview that with any new technology, bad actors will inevitably emerge from behind the curtain.
But Lindholm sees the issue differently.
“A lot of people think I’m deregulating these businesses,” Lindholm said. “But it’s the exact opposite.”
In Switzerland, which is often renowned for its friendliness to the business class, prestige is drawn from the idea of ultimate accountability: that while your assets are always protected, it is the CEO and the CEO alone who is ultimately responsible for any wrongdoing that occurs under their watch.
The same principle applies here: For Wyoming to gain respectability in the crypto world — and for crypto to be taken seriously — there needs to be an ample amount of regulation to help legitimatize the product. In Wyoming, this currently comes in the form of defining certain asset classes or could, down the road, result in a blockchain-based accounting system that offices like the secretary of state could use to track individuals who habitually abuse the system. Panelist Tristan Roberts suggested this idea in a discussion on the state’s entity innovations.
“It’s kind of antithetical to my normal stance on things,” Lindholm said. “But technically, blockchain businesses are more regulated here than they are in any jurisdiction in the United States.”
Whether Lindholm’s bets will pay off for Wyoming’s economy remains to be seen. Even with the generation of new taxes paid by the state’s new class of crypto banks (five of which should begin operations in the next year) and revenues from an uptick in corporate filing fees to the secretary of state’s office, some remain skeptical that the Cowboy State’s blockchain revolution will actually net economic benefit for the state.
Others, however, see opportunity. Amid the madness of last weekend’s conference, a sparsely attended panel occurred off the main atrium highlighting economic development opportunities for blockchain technology in communities across Wyoming. Among the few economic development professionals and journalists in attendance were Wyoming legislator Rep. Shelly Duncan, R-Torrington, and Goshen County’s Business Development Director Brayden Connour. They were both in attendance to mingle with the high-dollar attendees of the conference and see what prospects might emerge.
In an email following the conference, Connour said he did not have any specific reason for attending, looking primarily to learn if Goshen County could play in this emerging industry in Wyoming.
“We tried to make contacts and talk to these new companies about their wants and needs,” he said. “With that information we can determine if Goshen County can be a true player in trying to attract these businesses and companies. The opportunities are there for the entire state of Wyoming; these companies seem to be flocking here because of the favorable legislation that was passed.”
People with money — lured by its legal framework — have begun to stampede into Wyoming, flocking to conferences in places like Laramie and Jackson to meet one another, recruit fresh talent and learn new ways to make money. There’s something happening here, Lindholm said, and now, people of means are looking to Wyoming as a place where they can prosper.
All that remains now is to see how much of the money they stand to make in Wyoming actually stays in Wyoming.
“This has — and always will be — about economic development for the state of Wyoming and getting those jobs and businesses here,” Lindholm said. “Because that’s what we need. We desperately need these jobs. The opportunity to exist in the state of Wyoming … these businesses have got to exist somewhere, so why not here?”
Follow politics reporter Nick Reynolds on Twitter @IAmNickReynolds
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