TL;DR: BTC maximalist software company Blockstream announced its strategic partnership in applying for a bank charter from the Wyoming Division of Banking under the state’s special-purpose depository institution (SPDI) law, hoping for an early 2021 opening.
Blockstream Bank to Service Institutional Customers
“Avanti Financial Group announced plans today to launch a new US bank to serve the digital asset industry by offering solutions that can only be provided in the US by a regulated bank,” press materials revealed. Avanti will be domiciled in Wyoming, a hotbed of pro-blockchain, pro-cryptocurrency legislation in recent years headed by Wall Street veteran and Bitcoiner Caitlin Long.
“I’ve founded @AvantiBT w/ key support from top people in #crypto + important innovators from traditional finance,” Long tweeted. “Seed funding round recently closed. Avanti will serve institutional customers that need services around #Bitcoin & #cryptoassets.” Long and Blockstream are aiming at institutional money such as pensions, endowments, foundations who require a heavily regulated bank before entering into the cryptocurrency space in any significant way.
Describing the current efforts by various cryptocurrency-related companies and businesses seemingly making similar claims, Long said the present state of affairs amounts to a “logjam” the Wyoming SPDI legislation specifically breaks up, frees, and of which Avanti hopes to take advantage. Long is also a well-known Austrian School of Economics admirer, and fractional reserve banking is considered something of an anathema in such circles.
Custodian to Meet High Fiduciary Standards
By contrast, SPDIs mandate “all fiat deposits must be 100% reserved, assets can’t be rehypothecated + BY FAR strictest, fairest consumer protections in the industry. Many #crypto industry ppl advised & commented on early drafts of #Wyoming’s SPDI law & its rules,” Long elaborated.
Though Long hoped the flurry of pro-crypto legislation in her home state would bring about related banking applications for charters, little activity happened, and “none of them planned to fill the institutional void. There’s real customer demand in these mkts–real needs are not being met. I’ve seen this up close & personal (eg, universities have alums wanting to donate #crypto but face HUGE practical hurdles to accepting it; foundations recognize they can’t ignore a ~$300bn asset class anymore but realize a custodian doesn’t exist yet that can meet their high fiduciary standards),” she explained.
Blockstream, on the other hand, is considered a pariah among some peer-to-peer electronic cash enthusiasts for its alleged heavy-handedness in controlling debate about the early fate of BTC. Censorship campaigns to keep the BTC block size small, thus providing an excuse for second-layer solutions (to enable scaling and microtransactions without excessive fees), artificially creating a form of rent-seeking and manufactured market for proprietary products Blockstream develops, are all accusations continually leveled at the polarizing company.
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