As listed recently in the news, the cryptocurrency exchange Kraken has become the first crypto company to receive a bank charter.
This is a first step that may lead to broader adoption of crypto by the general public.
It is important to notice that what has been granted to Kraken is not a full-fledged national banking license or an industrial loan company charter, but a special-purpose depository institution license from Wyoming.
This is relevant because it represents a significant stepping stone in a state-wide development process that has been in the works for some time. In March 2019, Wyoming had enacted a total of 13 blockchain-enabling laws, making it the only US state to provide a cryptocurrency-friendly legal framework that allows blockchain technology developments for individuals and companies.
There is little doubt this is a calculated move backed by the federal government to bring capital, jobs, and revenue into Wyoming.
Much like Delaware represents a unique case for its corporate law - thanks to which many of America's biggest companies are incorporated in Delaware - the goal is to provide a dedicated infrastructure to incentivize the broader adoption of cryptocurrencies and the development of crypto-oriented businesses.
In other words, Wyoming is making a big push to become the Delaware of digital asset law.
The effect of Wyoming's laws are already visible as, besides Kraken, more companies are coming in the field: as announced already since February 2020, Caitlin Long, a former Morgan Stanley and Credit Suisse managing director, is starting a special-purpose depository institution (SPDI) that will provide payment and custody services to institutional investors and corporate treasurers, and six more companies have already applied for the charter in the state.
One important aspect of the SPDI charter is that while the company can hold digital assets, it won't have legal ownership to them. Caitlin Long, CEO of Avanti, said this is in accordance with the U.S. uniform commercial code, which means should the SPDI become bankrupt, the assets are returned to the customers 100%.
(source: IBTimes)
This is in stark contrast with a classic crypto exchange, where in case of bankruptcy or critical failure all customers' assets can be lost, and represents a significant advantage to provide peace of mind for customers and investors.
While only time will tell about the long term success of Kraken, the foundation laid by Wyoming's digital asset law and the resulting increased interest in providing the infrastructure between fiat and cryptocurrencies can set the momentum to start bridging the gap between the two worlds and increasing the adoption of digital coins in everyday use.
