- >First-Ever US Cryptocurrency Bank to Open in Wyoming in 2021
First-Ever US Cryptocurrency Bank to Open in Wyoming in 2021
Avanti, the US’s first regulated cryptocurrency bank, plans to open its doors in the surprisingly crypto-friendly state of Wyoming in early 2021. Caitlin Long, a blockchain pioneer and advocate for blockchain legislation, hopes it will be a regulated delivery vehicle for bringing cryptocurrency into the USD markets.
Evan Jones | Oct 12, 2020
The Avanti Financial Group was announced by Caitlin Long on Twitter on February 24. She hopes it will serve the digital asset industry and offer new products and services that are not currently available in USD markets, but why Wyoming? Oddly enough, it is partly because of Long that Wyoming has such progressive legislature relating to blockchain and cryptocurrency. When she tried to donate over $50k worth of Bitcoin to the University of Wyoming Foundation, she discovered that they had no way to turn it into cash because of Wyoming laws and began working to change them. Since then, Wyoming has been opening up its laws surrounding cryptocurrency and blockchain, most importantly the creation of a Special Purpose Depository Institution (SPDI) charter.
SPDI Garners Crypto Interest
SPDIs were created by Wyoming Legislature in 2019 to provide a home for politically declining businesses like coal companies if the Federal Deposit Insurance Corporation (FDIC) forces them to shut down their standard banking accounts. The charters presented a unique opportunity in the USA for potential cryptocurrency institutions. Because they are not insured by the FDIC, law dictates that SPDI charters must carry a 100% cash reserve for any and all depository liabilities, which is a category that includes cryptocurrencies. These banks also cannot lend any assets.
Starting an SPDI requires a high amount of capital, $25 million or so, meaning many potential applicants have been hesitant to apply, but Long felt the necessity for such an institution was too great to wait any longer.
Avanti Enters the Picture
The company has already raised $1 million in seed funding since the company’s formation on January 6, 2020. Avanti will provide payment, custody, securities and commodities activities for institutional customers using digital assets.
Its balance sheet plans to hold more assets than deposits and profits will be generated by providing services to institutional clients. Avanti will simply custody digital assets without changing ownership, much like the way a valet takes care of your car.
Blockstream was cofounded by Adam Back, who was an early contributor to Bitcoin and well-known cryptographer, and is a blockchain technology company that will provide Bitcoin applications, as well as the software and hardware necessary to custody digital assets.
With Blockstream’s “Liquid” the company hopes to develop a “one-stop shop” for digital asset custody according to Back, who is also the company’s CEO. This will be achieved by creating a sidechain, or parallel network to move money between exchanges. By partnering with Blockstream, Avanti can build adjacent blockchain application programming interfaces (APIs) and conventional banking APIs.
While the Blockstream partnership focuses on Bitcoin, Long clarified that Avanti will also provide services for other cryptocurrencies and digital assets. The company will also comply with all federal Know Your Customer (KYC), anti-money laundering (AML), and counter terrorist financing laws.
Avanti has yet to file its SPDI application but is working on filling it out and is slated to open doors in early 2021.