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Blockchain Helps Diversify Wyoming’s Economy

January 5, 2021
graphic of a chain

UW’s new Center for Blockchain and Digital Innovation aims to prepare students and create industry partnerships.

 

By Micaela Myers

 

In the near future, you’ll likely be paying for your dinner out not with cash or credit but with cryptocurrency.

“Blockchain technology is going to fundamentally change the way businesses and consumers operate in the future, very much like the internet did,” says Steven Lupien, director of the University of Wyoming’s new Center for Blockchain and Digital Innovation.

 

Wyoming Leads the Way

Wyoming is a pioneer state known for firsts. In recent years, the state passed groundbreaking legislation to create a regulatory environment to foster blockchain application growth and diversify the economy. To aid this effort and train the upcoming workforce, this summer UW launched the Center for Blockchain and Digital Innovation.

Simply put, blockchain is a digital record of transactions, where each transaction added to the chain is validated by multiple computers. Blockchain technology enables cryptocurrencies and digital assets but also has many other uses, such as supply chain management and payment systems. Many large companies already use the technology, but blockchain and cryptocurrencies will become much more ubiquitous in everyday life.

Wyoming’s road to innovation in this sector began when accomplished alumna Caitlin Long wanted to endow a scholarship for women in STEM—science, technology, engineering and math—using cryptocurrency. With Wyoming’s antiquated money transmitter laws, she found out she couldn’t, so she volunteered to help fix the regulations. Long earned her bachelor’s degree from UW in 1990 in political economy and went on to earn her master’s and law degrees from Harvard University. She chairs the highly successful WyoHackathon at UW (see page 20) and served as co-founder of the Wyoming Blockchain Coalition and as a gubernatorial appointee on the Wyoming Blockchain Taskforce.

Long gives credit to state Rep. Tyler Lindholm as one of the leading drivers in Wyoming’s legislative changes.

“The legislators saw there was an economic development opportunity,” she says. “It’s always been about jobs and bringing in outside capital to the state. Now, we’ll have employers looking for UW graduates.”

The effort to change the regulatory environment brought together both sides of the political aisle.

“In 2018, we passed HB 19, Wyoming Money Transmitter Act-Virtual Currency Exemption, that provided clarification that addressed that first problem that had been identified, but we took it further than that,” says state Wyoming Senate Minority Leader Chris Rothfuss. “We passed legislation that related to open blockchain token exemptions. We were the first state to recognize utility tokens as opposed to security-based tokens. That drew a lot of national and international attention. Other states looked to us for leadership. Congress looked to us on how we defined it.”

The leadership continued with provisions and statutes for conducting business electronically, limited liability companies, exempting virtual currencies from property taxation and more—

20 laws in all. 

“Our objective all along has been to create a governance framework that enables business, industry and individuals to be innovative in this space,” Rothfuss says.

Part of the state’s innovative legislation allows for a new type of bank that can custody digital assets. These banks are known as special purpose depository institutions (SPDI), and on Sept. 16, 2020, the Wyoming Banking Division approved Kraken’s application to create the world’s first SPDI. A second SPDI application, this one submitted by Avanti Bank & Trust, was approved Oct. 28—a bank founded by Long, who serves as CEO.

In September, Gov. Mark Gordon stated: “Today, Wyoming became the first U.S. state to approve a banking charter for digital assets. Wyoming’s new charter will allow those using digital assets, like cryptocurrency, to access reliable financial services, protect consumers, and allow businesses a way to hold digital assets safely. … I am proud that our state is leading the way and built the framework for this historic announcement. … Wyoming is taking its rightful place globally as a fintech leader.”

Chris Land, general counsel for the Wyoming Division of Banking and another leader in Wyoming’s groundbreaking blockchain laws, says: “Wyoming led the nation in granting women the right to vote and creating the LLC form of business entity. Wyoming is doing it again with digital assets now. Wyoming needs to diversify its economy, and financial services is a good way to do that. There is precedent for this—South Dakota amended its laws in the early 1980s to attract the credit card industry, and it is now home to two of the largest U.S. banks. Safely integrating digital assets into the U.S. banking system is all about providing a new path for Wyoming’s future.”

 

man sitting in front of bucking horse statue
Steven Lupien, director of the new Center for Blockchain and Digital Innovation. (Courtesy Photo)

Center for Blockchain and Digital Innovation

The Center for Blockchain and Digital Innovation features an interdisciplinary approach among UW colleges—including the College of Business, College of Engineering and Applied Science, College of Agriculture and Natural Resources, and the College of Law—as well as the state’s community colleges. The center will focus on fostering innovation, applied research and education, technology development, economic development and job growth and corporate engagement.

“This new center supports three of the four pillars we’ve established to guide the university: being more computational, interdisciplinary and entrepreneurial,” UW President Ed Seidel says. “We truly appreciate the support of our external partners that has helped UW be at the vanguard of this exciting technology. The university is committed to helping drive future economic development in Wyoming, and this center has incredible potential to do so.”

As director of the center, Lupien brings with him a wealth of industry experience, including service as president and CEO of BeefChain, a Wyoming rancher-centric supply chain company using blockchain technology to recapture the value now realized by third-party feedlots and processors; founder and adviser of the Digital Asset Trade Association; vice president of sales, engineering and customer service for Five Star Products; and director of sales and marketing for Walker Systems Support.

“UW recognizes that for the state to be successful, we need public-private partnerships to help attract companies and work with them on developing their products,” he says. “But, more importantly, those companies are going to be the ones hiring our graduates. This is an opportunity for me to use my background and experience to help UW and our students prepare themselves for what I believe will be a quickly growing industry in the state.”

College of Business Dean Dave Sprott says: “One of the big things is to train our students to be prepared for this new era that will be coming to our state. So our first step is to start a minor at the undergraduate level that will be open to any major by fall 2021.”

From there, they will work to develop technical graduate certificates and a joint law and business master’s degree.

Last February, UW received a $500,000 gift in Ada cryptocurrency from IOHK (Input Output, iohk.io), a leading international technology company, which was doubled to $1 million by state matching. The donation, among the largest cryptocurrency gifts to a public university, helped to establish a blockchain lab in the College of Engineering and Applied Science that will work in cooperation with corporate partners. 

“The IOHK lab is focused on the security of blockchain technologies,” says Mike Borowczak, the Loy and Edith Harris Assistant Professor of computer science. He is also director of the Cybersecurity Education And Research (CEDAR) Center and Lab and codirector of the Wyoming Advanced Blockchain Lab, both a part of the Secure Systems Collaborative. “The idea is leveraging UW students and researchers to develop mechanisms to increase the security of this relatively young technology.”

Land says, “The UW Center for Blockchain and Digital Innovation will hopefully equip students with the high-paying skills they need to find a great job here in Wyoming. The center will also conduct interdisciplinary research into blockchain and digital asset issues, setting the foundation for the university to be a global leader in shaping the future economy.”

There are only a handful of universities nationwide with blockchain centers such as UW’s, including Arizona State University, the University of Arkansas, Carnegie Mellon University, Columbia University, Cornell University, Duke University, the University of Michigan, MIT, Stanford University and University of Texas at Austin.

“UW is in rarefied air,” Long says. “We’re working with some of the top scientific universities in the country.”

Few universities with blockchain centers are land-grant universities, which made a partnership with the University of Arkansas a perfect match.

“The partnership between the blockchain centers of excellence at the University of Arkansas and the University of Wyoming is a natural fit,” says Mary C. Lacity, the Walton Professor of Information Systems and director of the University of Arkansas Blockchain Center of Excellence. “We are both public institutions with missions to create and disseminate knowledge about blockchain-enabled solutions that deliver business and social value. Industry partners and students from both campuses will benefit by having access to a broader network of thought leaders, resources and events.”

Both universities have a practical—as opposed to technical—focus to their blockchain work. The University of Arkansas focuses on supply chain, and UW has a unique opportunity with the state’s SPDI banks.

“Through a partnership with the University of Arkansas, we can lead with each of our strengths to help teach other,” Lupien says. “We have a very similar mindset of how blockchain is not only a technology but an opportunity for businesses to solve problems.”

 

three women standing together
WyoHackathon Chair Caitlin Long (center) at the hackathon with two students from Shoshoni High School. (Photo courtesy of WyoHackathon)

WyoHackathon

This past fall, the third annual WyoHackathon took place, this time virtually. It included six free events covering the blockchain themes of sources, impact and implementation to unite worldwide leaders, participants, legislators and changemakers.

The Sandcastle Invitational, a startup qualifier competition, sought the best and most promising blockchain, artificial intelligence and other technology startups to compete in Laramie and then Dubai for the finale. The Stampede Law Conference aimed to educate, leverage and frame the benefits of what Wyoming’s 20 new laws have to offer and the issues still to be tackled. A Stampede Developers Conference featured technical speakers and workshops to help attendees prepare for the WyoHackathon challenges and to introduce new technologies, concepts and emerging standards. A monthlong virtual WyoHackathon welcomed software developers. Lastly, the Stampede Business Conference featured speakers and workshops helping attendees understand the Wyoming legislative environment, the business opportunities presented by digital technologies such as blockchain and how these technologies will impact Wyoming and the worldwide economy.

“The conference itself was a smashing success,” says WyoHackathon Chair Caitlin Long. “We had at least three billionaires in Laramie for it, including Tim Draper, a very well-known, successful Silicon Valley venture capitalist. He made the trip even though the conference was virtual. We had more than 2.5 times the number of participants. We had more than 1,000 unique visitors to the website each day for the contest. We brought in people from all over the world, which has been the case for all of these hackathons.”

Now falling under UW’s new Center for Blockchain and Digital Innovation, the hackathon is projected to continue to grow in future years.

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