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Oklahoma Senate study to gauge potential of blockchain technology

 The Journal Record | August 5, 2019

OKLAHOMA CITY – State senators set to explore a new frontier in finance may find that the trail leads to Wyoming.

State Sen. Nathan Dahm, R-Broken Arrow, who asked for an interim study on blockchain technology, virtual currencies and their potential for Oklahoma, said the Sooner State and others may be following Wyoming’s lead in some ways in examining laws and otherwise preparing for a future when “cryptocurrencies” like Bitcoin will increasingly be used to conduct business and facilitate personal financial transactions.

Dahm said members of the Senate Business, Commerce and Tourism Committee have been asked to investigate how state laws might need to be amended to address such things as banks acting as repositories of digital assets.

“I’m hoping to bring in some experts that have seen implementation of this from a business perspective,” he said. “I thought it would be a good opportunity for Oklahoma. We could really be a leading force in the market. My goal is to open it up so we might lead the way.”

Dahm introduced five bills in the past legislative session dealing with cryptocurrency and blockchain technology. None advanced to the governor’s desk. However, Dahm said the Department of Commerce also is now delving into what the future might hold for the technologies, and he expects cryptocurrency and blockchain to be addressed in an omnibus bill during the 2020 legislative session.

Blockchain has been defined as a massive “digital ledger” occupying a “public cloud” consisting of the shared capacities of millions of computers collecting and storing endless streams of data blocks. The blocks are encrypted in a special way, so everyone can have access to all of the information but only a user who owns a special cryptographic key is able to add a new record to a particular chain. Dahm said the self-checking technology has proven to be incredibly secure. Bitcoin, described as a “peer-to-peer” cryptocurrency, has gained traction worldwide as a viable way to conduct all kinds of business as a result of blockchain. Bitcoin’s powerful allure stems from the idea that it can be transacted without a centralized bank or other third-party acting as an intermediary.

Dahm said blockchain ledger keeping has immense potential to advance business in other ways. For example, in Wyoming, a blockchain-based initiative has been launched to track the progression of products through meat industry supply chains. It allows users to quickly verify links in the chain from where animals originate to where their meat gets placed in grocery store refrigerators. In fact, the livestock industry has been near the forefront in employing blockchain technology. International source-traceable solutions also have been applied to the fish and poultry industries.

Wyoming lawmakers have adopted laws to attract businesses that deal in cryptocurrencies to their state. Thirteen “blockchain enabling” bills were passed this year, including one allowing for cryptocurrencies to be legally recognized as money categorized as digital consumer assets, digital securities or virtual currencies. Another new law allows for creation of “special purpose depository institutions” to provide basic banking services to blockchain and other businesses. The “bank” is required to maintain 100% reserves, cannot lend, is for business depositors only, and Federal Deposit Insurance Corp. coverage is optional. Such banks could be operating as soon as March 31, 2020, taking deposits of digital assets identified as “assets under administration.”

In his inauguration speech, Wyoming Gov. Mark Gordon said the state was the “envy of the nation” for its innovative approach to blockchain. Caitlin Long, who served on a Blockchain Task Force formed by the governor, described the initiative as a way to position Wyoming as the “Delaware of digital asset law,” a reference to laws passed in Delaware to make that state attractive as a home to publicly traded corporations.

“Capital ultimately flows to where it’s treated best. For digital assets within the United States, I’m pretty confident that will end up being Wyoming,” Long wrote in an article about the state’s strategy that appeared in Forbes Magazine.

Other states and nations are, like Oklahoma, sill exploring the blockchain and cryptocurrency landscape. According to the Library of Congress, some countries, including Algeria, Bolivia, Morocco, Nepal, Pakistan and Vietnam, ban any and all activities involving cryptocurrencies.

Dahm said he hopes the Oklahoma Senate committee’s interim study will give lawmakers a better understanding of the potentials of blockchain technologies for government and business.

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