Lawmakers in the State of Wyoming have proposed a bill to require that cryptocurrency be treated the same as fiat currency under the state’s money transmitter’s act, according to the Wyoming Tribune Eagle. The purpose of the bill is to encourage bitcoin-friendly companies to want to do business in the state.
Under the current law, a money transmitter that wants to conduct a bitcoin transaction has to hold in reserve the transaction amount in both fiat and in bitcoin; double the amount being sent. House Bill 26 would only require them to hold the amount being sent.
The bill’s main sponsor, Rep. Tyler Lindholm, R-Sundance, said he became aware that the state treated bitcoin unfairly when he learned that Coinbase told one of his friends they would no longer operate in Wyoming because of its regulations.
To explain the current inequity, Lindholm gave the example of sending $100 via Western Union. The money transmitter act requires Western Union to have $100 in cash reserve in the event that they lose the money.
If someone wanted to send money using PayPal and pay with bitcoin, under the current law, PayPal would need to reserve $100 in bitcoin in addition to $100 in fiat currency. The $100 transaction would require the money transmitter to hold $200 in reserves.
“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.”
Lindholm said that while bitcoin is the most common cryptocurrency, there are more than 650 such currencies available. He described cryptocurrencies as a type of hybrid between fiat and precious metals. Digital currencies, like fiat, carry value based on trust in the system rather than a backing commodity. Like precious metals, digital currencies are finite, meaning there is a limit to the number of units produced.
Lindholm explained that bitcoins are created by a decentralized process known as “mining,” in which individuals process transactions and secure the bitcoin network using computer hardware. The miners collect new bitcoins in exchange for providing this service.
Sen. Chris Rothfuss, D-Laramie, one of the co-sponsors of the bill, said that while he does not want to have all of his money in bitcoin, the state should not treat bitcoin differently than any other currency.
Rothfuss and other bill co-sponsors believe that cryptocurrencies deserve fair treatment in what is known as the “Equality State.” They also recognize that bitcoin usage has increased.
Lindholm said the law makes sense considering that some bitcoin-friendly companies have left the state.
Lindholm said bitcoin may be hard to explain to other lawmakers, but he is hopeful he can win the two-thirds majority needed to introduce the bill to the House of Representatives in a budget session.
He said the bill is about keeping equal opportunity among currencies. He said the state does not want to force businesses, especially emerging technologies, to leave.
Featured image from Shutterstock.
Last modified (UTC): January 25, 2016 13:40