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In the early 1990s, the RBOC or regional bank collapses led to the fall of community banks and an effective end to community lending. With the collapse of community lending — meaning loans to about 50k for the development of small businesses, mom and pop shops and bodegas — we lost much of the financial momentum that drove inner cities and rural economies.

The continued consolidation of the banking system after the 2008 financial crash has led to the current market scenario where almost no small business has easy access to capital — without a near 100% collateralization of a loan.

The JOBS act — which was intended to open smaller markets to take on capital from everyday investors — failed to matriculate results and ended up as more dead policy.

The rise of crypto brought the potential of small lending and micro loans to reality — there are only a handful of companies and ICOs that have begun to realize the potential of satisfying mid and small market demands for capital to stimulate businesses and job growth.

Wyoming, however, has begun to change all of that.

In February, The Wyoming State Legislature passed HB70 and HB101 alongside three other crypto favorable bills. On July 1st they became law.

Wyoming became the first state in the nation to define the different types of tokens — and began to move away from utility tokens to define both Security and Consumer (Open Blockchain Tokens) tokens.

We’re all aware of the mess that Utility tokens created, as well as several ICOs that were blocked by the SEC due to either fraud or negligence.

The definition of tokens by HB70, allows us to move forward from this and begin to look at Security and Consumer tokens, in a new way. Security tokens are simply defined by the Howey test.

Consumer tokens, on the other hand, are defined as exchangeable for a good or service at a future date. What this means is that a Barber shop could setup a Wyoming ICO and sell 10,000 future haircuts at $10 each and raise $100,000. This also means that any small business can leverage an ICO or TGE (token generation event) to fund everything that the SBA promises but banks make relatively impossible for small businesses to capitalize upon. For-Profits, Non-profits, NGOs or social good organizations can also leverage this model to quickly create an offering and legally fund operations, in short order.

To take this a step further — you could take Starbucks, whose Starbucks card holdings make them one of the largest “Banks”in the US and raise $100,000,000 simply by selling a “future frappucino” consumer token or securitizing the cards and issuing a security token.

HB101 adds to this by removing taxes from crypto transactions — which should be of he interest to Millenial and Gen Z entrepreneurs, who are crypto enthusiastic and traditional finance reticent.

DATA (the Distributed Ledger Technology (DLT) trade association) and Consensys, based in Brooklyn, NY have espoused the consumer token moniker — which is helping in acceptance of the terminology — but also helping us walk away from the utility token mess of 2017.

In NY, we have seen Governor Cuomo Weaponize the financial system by limiting banks and insurance departments from working with certain cause groups and industries. Across the US, a large number of consumers, investors and companies have had their accounts shut down by Banks that don’t want to work with crypto.

Steven Lupien, Executive Director of DATA noted that “DATA, which is a non-profit, had its’ bank account closed” and that “The Compliance departments of traditional banks will not allow for the banking of crypto, because they worry their FDIC insurance will be pulled”.

However DATA, and a number of Wyoming legislators are championing SPDIs — a special purpose bank that eschews FDIC insurance, in order to allow for the creation of US banks that are both crypto friendly and allow for the growth and proliferation of Blockchain businesses.

Several state legislatures have taken the Wyoming HB70 framework and are looking to build similar legislation that can open the doors for both crypto investment and job creation.

Should this succeed, in tandem with the development of SPDIs — we could be looking at a brand new world of financial products, within a burgeoning crypto market — that we’re just beginning to tap — or as Alanna Gombert, CEO of DATA notes — “regulations stand to open a new market of opportunities that centralized government has yet to explore”.