After years wooing the cryptocurrency and digital asset industry, Wyoming’s efforts were rewarded last month by one of the biggest players in the space.

Kraken — a multi-billion-dollar crypto company with over 2,200 employees and 15 million customers around the globe — announced it had officially moved its headquarters to Cheyenne.

“Wyoming may feel like one small town with really long streets,” Trevor Rutar, the Cheyenne-based head of Kraken’s banking venture, wrote on LinkedIn, “but it continues to punch above its weight in the future of finance.”

In a lengthy post on X, Kraken co-CEO Arjun Sethi praised the state for building the “most comprehensive and technically coherent legal framework for digital assets” in the country.

“This decision wasn’t about headlines or optics,” Sethi said. “It was about alignment.”

The company, which allows customers to securely trade cryptocurrencies and more traditional assets, opened a Cheyenne office over four years ago and has contributed hundreds of thousands of dollars to the University of Wyoming’s blockchain program. But the formal establishment of a Wyoming headquarters makes the company’s ties to the state “permanent,” Sethi said.

For the lawmakers and others who’ve led Wyoming’s yearslong effort to become a crypto hub, Kraken’s announcement is a big deal — particularly at a time when other states are beginning to vie for the industry’s business.

“For them [Kraken] to make this step now and kind of recognize and come to Wyoming, I just think it’s a really cool sort of validation of all the work that Wyoming has done,” said Matt Kaufman, a Cheyenne attorney and longtime member of the state’s blockchain committee.

Long-running pursuit

The digital asset space is best known for its volatile cryptocurrencies, like bitcoin and ether, and the massive gains and losses that can result from buying and selling them. But advocates, including those in Wyoming, see much broader potential in the underlying blockchain technology.

Blockchains are shared ledgers that allow transactions to be readily verified by all participants and, in theory, make it nearly impossible for the data to be tampered with or altered. Beyond tracking the transfers of digital tokens, supporters see a variety of potential uses ranging from supply chains, to electronic voting to making secure payments at a fraction of the cost of credit cards.

Believing that the technology would bring new jobs and other economic development, Wyoming lawmakers set out to become the home base for the digital asset industry in the same way that South Dakota became the hub for credit card companies. Over the past eight years, state lawmakers dove into the topic and passed over 30 laws related to blockchain technology and digital assets — from setting up a framework for crypto-banks to making clear what happens to customers’ digital assets if a crypto custodian goes bankrupt. 

“When we started, the large financial institutions were shunning digital assets with every fiber of their being. They loathed them,” recalled Wyoming Sen. Chris Rothfuss, D-Laramie, who co-chairs the Legislature’s Select Committee on Blockchain, Financial Technology and Digital Innovation.

But traditional players have since come around: juggernauts like Fidelity and Blackrock now hold billions of dollars worth of bitcoin on behalf of their clients; Amazon and Walmart are reportedly mulling the possibility of launching dollar-like cryptocurrencies known as stablecoins in an attempt to save “billions of dollars” in payment fees; and the state of Texas is preparing to buy $10 million worth of bitcoin as an investment.

“A bunch” of the top 10 players in the traditional financial services space are looking to get into crypto, Kraken’s other co-CEO, David Ripley, recently told CNBC. “And we’re having a lot of discussions with them on how we can help them pull that off.”

Incorporating versus arriving

With crypto having its moment in the spotlight, Wyoming leaders are hoping the state’s time has come as well. Steve Lupien, the director of UW’s Center for Blockchain and Digital Innovation, noted the state has been working to pave the way for the digital asset industry for a “long time” — since 2017.

“… Sometimes we’ve kind of said, ‘Gee, it shouldn’t be this hard. I wish it would happen faster,’” Lupien said. “But it’s starting to happen now.”

He said “thousands” of entities in the digital asset space have domiciled in Wyoming in recent years. Some, like Cardano blockchain founder Charles Hoskinson, have also built deep connections in the state. Other firms aren’t based here, but have people living and working remotely in the state.

However, in many cases, the only thing “Wyoming” LLCs and more crypto-focused decentralized autonomous organizations, commonly referred to as DAOs, do here is hire a registered agent to serve as their public face and pay the Secretary of State’s Office an initial $100 fee and then $60 annually.

Kaufman has spent 18 years helping people form companies in Wyoming, and he acknowledged that new filings don’t always mean new business in the state.

“But what I would say, in my experience, is one follows the other,” he said. 

Many times, Kaufman said, a company that forms some Wyoming LLCs decides to do more, such as make a deal or open an office here. Between the state’s status as a leader for incorporations, a new chancery court dedicated to expeditiously handling business disputes and the ongoing work on digital assets, “it starts to move the needle to where people say, ‘OK, this makes more and more sense, and we’re going to go ahead and move,’” Kaufman said.

“Over time,” he said, “that momentum continues to build.”

What’s in a move?

Digital asset companies tend to be “decentralized,” and Kraken, which has employees in over 70 countries, doesn’t appear to be bringing a huge swath of new workers to Cheyenne.

“In accordance with our remote-first operating model Kraken has historically eschewed large, physical offices,” a company spokesperson told WyoFile.

Kraken, which has significantly reduced its workforce over the past couple of years, had 45 open jobs around the time of the announcement; 42 were fully remote while two were based in Washington, D.C., and one in San Francisco.

A Kraken spokesperson said the company doesn’t disclose how many people it employs in Wyoming, “to protect their privacy and the security of our business.”

However, co-CEO Sethi described the establishment of the headquarters as a “long-term investment” in Wyoming and said he’ll personally be “looking for a place in the Jackson area, because proximity matters.”

Rothfuss said the digital asset industry isn’t one that brings, say, 1,000 manufacturing jobs to one place, but he believes Kraken’s move will mean an increased in-person presence.

“We do know that as that ecosystem builds out, it does create more and more businesses and more and more opportunities that generate real jobs and real work in Wyoming,” Rothfuss added, “and we’ve seen that.”

Kraken is a big fish in the crypto world, ranking as the second-largest exchange in the United States. It generated $1.5 billion in revenue last year and is reportedly taking steps toward going public.

Beyond facilitating the sales of scores of crypto tokens, the company secures digital assets for institutional customers, and began offering traditional stock and ETF trading earlier this year. More recently, Kraken acquired NinjaTrader to offer futures trading and launched a new global payments app.

“We’re building a platform that goes beyond crypto trading — it powers the next era of global finance,” Sethi wrote earlier this year.

Founded in 2011, Kraken is one of the oldest digital asset companies around, and “they’ve just developed an incredibly impressive reputation in the industry,” said Kaufman.

Rothfuss believes Kraken could now be the most valuable company based in Wyoming.

Krakenite culture

Like many tech firms, Kraken was previously based in San Francisco. However, the business shuttered its headquarters there in 2022, citing not only its remote-first approach but also the city’s “out of control” crime, mental illness and drug abuse.

“San Francisco is not safe and will not be safe until we have a [District Attorney] who puts the rights of law abiding citizens above those of the street criminals he so ingloriously protects,” Kraken’s founder and then-CEO, Jesse Powell, said in a statement at the time. 

The DA in question, Chesa Boudin, was later recalled by voters.

Powell is known for his libertarian views, drawing headlines for his sharp criticism of what he sees as “woke” concepts. Amid some internal disagreements over the company’s culture in 2022, he and Kraken released a document outlining its philosophy. It includes a commitment to liberty, due process, personal property rights and limited government.

For instance, Kraken says it: honors workers’ rights to “bodily autonomy,” such as by rejecting vaccine mandates; leaves it up to employees as to whether they want to use their coworkers’ preferred pronouns; hires strictly on merit rather than through “stereotypical team diversity measurements”; and may offer firearm and self-defense training at its corporate retreats.

Kraken cautions prospective employees that its culture may not be the right fit for every potential job applicant, but also emphasizes that “crypto is for everyone.”

“All are welcome to join the revolution,” the document says.

Politics move on-chain

Crypto was born out of a kind of libertarian ethos and a distrust of institutions, from governments to traditional banks. That’s reflected in the very design of blockchains — ledgers that are intended to be “transparent, immutable and resistant to tampering,” as Investopedia puts it.

Those in the space have generally kept politicians and partisan politics at arms’ length. But the conversation about crypto has become more partisan in recent years, following a regulatory “crackdown” by the Biden administration that the industry viewed as unfair and Donald Trump’s pivot from crypto critic to cheerleader and participant.

The industry responded to Trump’s embrace with a flood of campaign contributions. Kraken co-founder Powell gave the president $1 million worth of crypto last summer and the company itself chipped in $1 million to his inaugural committee, alongside other crypto firms and traditional corporate giants like Pfizer, Verizon and Toyota.

Since taking office, Trump has followed through on his promises to make the federal government more crypto-friendly, with his Securities and Exchange Commission dropping suits against and probes of numerous exchanges, including Kraken.

Under the new administration, Kraken also relaunched a staking service, which is a way for customers to receive passive income on their crypto holdings. Biden’s SEC had shut down the service and imposed a $30 million penalty on the company in 2023 — actions that Kraken viewed as “politically motivated.” In March, co-CEO Sethi said he believed Trump had helped “shift crypto from a partisan debate to a shared national interest.”

A polarizing president

But not everyone sees it that way.

Beyond backing the industry, Trump and his family members have launched — and profited from — various crypto ventures over the past year. Trump recently disclosed that he’s earned over $57 million from one of those endeavors. And in May, he hosted a private VIP reception and dinner for those who bought the largest quantities of his $TRUMP memecoin — a move that gave “pause” to even supporters like U.S. Sen. Cynthia Lummis, R-Wyo., who’s a leading voice on digital assets.

Concerns about the president’s involvement with crypto were apparently one factor behind Senate Democrats’ early May vote to oppose the GENIUS Act, a Lummis-backed measure that aims to create a regulatory framework for asset-backed cryptocurrencies known as stablecoins. The bill was backed by members from both parties up until the 48-49 vote, largely along party lines.

U.S. Sen. Elizabeth Warren, a Massachusetts Democrat and one of the industry’s harshest critics, told reporters that the bill would put both national security and the broader economy at risk and “supercharge Donald Trump’s corruption.”

Rothfuss compliments the administration’s work to loosen some of the regulations on the industry, but said Trump’s personal projects are “just utterly poisoning the well.”

“It’s now becoming harder for national-level Democrats to support digital assets,” Rothfuss said, “because their constituents are seeing the fraudulent actions of the president, and associating that not just with the president, but with digital assets.”

He’s even been hearing more concerns among Wyoming Democrats about the space. “That’s a headwind that is disappointing to have to deal with.”

(The White House has said the president attended the dinner on his personal time, isn’t involved in the management of his assets and is following federal ethics rules.)

Seeking bipartisanship

Despite the initial setback, the GENIUS Act ultimately cleared the Senate by a 68-30 vote, winning the support of 18 Democrats.

During a late June subcommittee hearing to discuss an overarching market structure for digital assets, Lummis emphasized that she wants to “make sure that we continue to have a bipartisan discussion.”

The veteran lawmaker also said she was unsure why the topic has become more partisan.

“Maybe this is about concern that certain people that have family members in the [Trump] administration are going to be advantaged in some way by what we’re doing,” Lummis said, but “I don’t want that to be the case. I want everybody to be advantaged.”

The Wyoming Legislature has also prided itself on a bipartisan approach. Rothfuss, who’s one of only eight Democrats in the body, and Rep. Daniel Singh, a Cheyenne Republican and member of the Wyoming Freedom Caucus, underscored that cooperation in a May op-ed.

“Our collaborative efforts in the Wyoming Legislature, alongside Lummis’ leadership in Washington, show that Republicans and Democrats can navigate complex issues together,” the co-chairs of the state blockchain committee wrote, “crafting policies that protect consumers, foster innovation and strengthen America’s position in the global digital economy.”

Internal and external headwinds

Of course, not everyone is on board. Wyoming’s pursuit of the crypto and digital asset industry has drawn skepticism from all ends of the political spectrum, and some question the whole thing. At a recent blockchain committee meeting, retired geoscientist Kerry Aggen of Buffalo told the panel that, “the term digital asset is an oxymoron: Anything digital does not actually exist in real life.”

The complicated nature of the technology and esoteric nature of some of the legislation are also hurdles. At the same committee meeting, Rep. Lee Filer, R-Cheyenne, said it was tough to explain a set of proposed changes to the state’s crypto-focused banks — Special Purpose Deposition Institutions that are abbreviated as SPDIs or “speedies” — to his colleagues in the House.

“There’s many that just don’t understand it,” said Filer, who runs a bitcoin mining operation. “Eyes were glazed over.”

The industry has also received several black eyes from bad actors, hacks and exploits.

Crypto tends to run in boom-and-bust cycles, and a hyperbolic rise in token prices in 2020 and 2021 was followed by a massive crash — and subsequent implosion of several multi-billion dollar enterprises. That included the crypto exchange FTX and lending platform Celsius, which were revealed to have treated their customers’ deposits like their own play money; the leaders of both platforms are now serving federal prison sentences for fraud.

Rothfuss argues that an outfit like FTX “couldn’t have gotten away with it” here, noting the safeguards in place for SPDIs. Wyoming’s regulations attract good actors and keep bad ones out, he said — unlike other states where companies “can just do as they see fit.”

More crypto competition

The increased interest in digital assets across the country has brought Wyoming more competition for the industry’s attention.

Robert Slater, a director of an SPDI called Commercium Financial, told lawmakers in May that the shift in sentiment has led some potential investors and customers to explore other options in Texas, New York and South Dakota. 

Barriers are also being lifted at the federal level: While Slater expressed continued optimism, he said new FDIC guidance allowing traditional banks to get involved with digital assets — potentially with fewer requirements than a SPDI — makes it “harder to champion the story of ‘why Wyoming.’”

Rothfuss said he and other state leaders long expected that large institutions would resist digital assets “right up until they wanted to make money,” at which point they would try to shut out Wyoming and its SPDIs.

“So nothing we’re seeing is surprising,” he said, “and we’ll keep trying to position ourselves in a leadership role.”

Both Rothfuss and Kaufman believe the state remains ahead of the pack, thanks to its years of work on the nitty-gritty details. In Kraken’s announcement of its new Cheyenne headquarters, Lummis said the move reinforced Wyoming’s position as “America’s premier crypto hub.”

Cody Carbone, the CEO of The Digital Chamber, indicated there are similar opinions among the more than 200 blockchain companies that his D.C.-based organization represents.

“Yes, everyone is very bullish on Wyoming,” Carbone said in an email. “It’s still viewed as the foundational jurisdiction for crypto regulation.”

That could change, he said, but Wyoming is “very attractive” to crypto companies that rely on remote work and want to leverage the state’s reputation, regulatory framework and tax incentives.

“I think Wyoming will always be successful,” Carbone said, “because the State is nimble enough to continuously innovate.”

The limits of small multitudes

Wyoming does, however, remain limited in its ability to recruit businesses by having the smallest population in the union.

The country’s largest crypto exchange, Coinbase, also nixed its San Francisco headquarters in 2021. However, as Kraken decided to anchor itself in Cheyenne, Coinbase reestablished itself in the Bay Area city by leasing a massive, 150,000-square-foot office space.

Asked why the company would set up shop in tax-heavy California, Coinbase CEO Brian Armstrong said many of their employees live there.

“We go to where the talent is,” Armstrong wrote on X.

His comment would seem to fit with Wyoming Business Council CEO Josh Dorrell’s experience — that companies care more about a vibrant workforce than low taxes.

“I have worked with and for countless companies that have very seriously looked at wanting to come to Wyoming, and they want to be here,” Kaufman said, “but when the rubber meets the road, it’s like, ‘Gosh, there’s not a good option for a place to put 100 people — and we don’t know that the labor force is there for us to hire 100 people as quickly as we need.’” 

While frustrating, “it is what it is,” he said, “and that’s why … I think we have to expect wins over time.”

Lupien, however, is quick to argue that Wyoming has a lot to offer to the digital asset industry, even when it comes to the workforce. UW is one of the only Division I universities in the country offering a minor in blockchain — about 120 students go through the program each year — and he burnished the programs offered by the College of Engineering and School of Computing.

Lupien also heralded Wyoming’s quality of life, saying the more time people spend in the state, the more they come to appreciate it.

“I think Wyoming can compete,” he said, “and obviously it has in the case of Kraken.”