CHEYENNE – The company behind the digital currency with the 11th-highest market capitalization in the world decided to move its home base from Hong Kong to Wyoming recently as cryptocurrency-friendly laws keep making headway.
Cardano, the company behind digital currency ADA, is making the move partly to be closer to founder Charles Hoskinson’s home in Denver, though Hoskinson hasn’t publicly stated the reasoning behind the move.
“Since I forgot to comment on [Cardano’s move to] Wyoming, here's a picture of Weird Al and me cowboying it up,” he said on Twitter.
He revealed the move to Wyoming during an obscure November interview at a conference in Malta.
“Actually we’re leaving Hong Kong,” he said in response to a question of whether he’d move his business to Malta, where the conference was being held. “We’re moving to Wyoming. … We’re now a U.S. company.”
It’s unclear if the move to Wyoming means the establishment of a headquarters or is more of a transfer of incorporation to take advantage of Wyoming’s cryptocurrency and blockchain-friendly laws. Blockchain is the technology underpinning digital currencies like bitcoin, and is a technology proponents say is more secure by storing data on a series of “nodes,” rather than a single hackable server.
But he pointed to the role of regulations for the industry during the interview. Hoskinson told public relations agency EAK Digital that blockchain regulation can be good or bad, depending on how it’s applied.
“Regulation is generally a response to bad behavior of incumbents in your industry,” he said, indicating that about 70 percent of 2017’s initial coin offerings – the digital currency equivalent of initial public offerings – were in some way fraudulent. “That’s a real big invitation for regulators to take the space more seriously.”
He added that regulations could add clarity, as well as checks and balances, to the crypto markets.
For the past two years, Wyoming has been working to pass laws that could make it “the Delaware of the West” for technology companies operating on the blockchain. Delaware is often considered the best place to incorporate a business because of its laws, making it a hotbed for business, even if relatively few businesses physically reside in the state.
In the current Legislature, six bills related to blockchain are up for consideration, said David Pope, a certified public accountant in Cheyenne who also leads the Wyoming Blockchain Coalition.
The flagship bill among them is one that could create a bank that couldn’t discriminate against “out-of-favor” industries like pawn shops, payday loans and those operating on the blockchain. Pope said he had his own run-in with discrimination when a nonprofit company acting as a self-regulating group for the blockchain industry had its account closed after two days of service. This can mean a death sentence to a business as the IRS requires a banking account for payroll and estimated tax payments in many cases.
The banking industry, Pope said, is wary of the bill that could bring other banks to the state that don’t have to be insured by the FDIC. Instead, the bank would need to maintain all its deposits either in cash or in liquid U.S. treasuries.
Other bills at Legislature include allowances for financial tech companies to experiment more, and allow corporations to move their shareholder records or board actions and the like to the blockchain for additional security, among others.
“Wyoming is poised to be the main data hub in the U.S.,” said Reddit user andnosobabin in a thread talking about the implication for Wyoming as Cardano moves in. ”I hope IOHK (the parent company of Cardano) jumps in and makes a name there.”
Hoskinson was a co-founder of Ethereum – the third-largest cryptocurrency by market cap – prior to starting Cardano as a “passion project” to iron out problems that other digital currencies face.
On its website, Cardano states as its goal to “provide a more balanced and sustainable ecosystem that better accounts for the needs of its users, as well as other systems seeking integration.”
Currently, the currency is working to decentralize in a large update geared toward making the currency more user-friendly.
“What cryptocurrencies did is it woke everybody up and said, ‘If you don’t like your money, you can create your own money,’” Hoskinson said, adding that his contractors in Ukraine all get paid in bitcoin because they don’t like the local currency. “I couldn’t do that 5 to 10 years ago.”
He said currencies will become further decentralized through the crypto movement as competing currencies and tokens take hold. He envisions a world where you can pay for a hamburger with airline miles, and it’s all easily convertible to dollars, if users so choose.
“You can have portfolios composed of anything,” he said. “It’s being completely in control of our economic reality, whether we won the geographic lottery or not.”
But opponents prefer to think of crypto assets as “portfolios of nothing,” pointing out that nothing seems to actually back the value of cryptocurrencies like Cardanos Ada.
And despite consistently being labeled a top-performing cryptocurrency, Ada sits 97 percent off its peak as of this writing. Meanwhile, Hoskinson has taken to social media to defend his currency from attackers that say it’s not living up to expectations.
Multiple requests for an interview with Cardano founder Charles Hoskinson went unanswered.
Watch for more on this theme in the February print issue of Wyoming Business Report.