Sen. Mike Flood provided additional background on his proposed Nebraska Financial Innovation Act on Wednesday morning at a meeting of the Norfolk Chamber of Commerce's Government Affairs Committee.
Flood said the act would motivate cryptocurrency companies to move their headquarters to the state by creating a cryptocurrency bank charter.
Flood said a friend who worked in the financial technology industry reached out to him after Wyoming became the first state to pass a similar bill, saying that he was considering moving his company to Wyoming. This conversation is what gave Flood the idea, he said.
“By focusing on workforce and economic development, the Nebraska Financial Innovation Act sends a strong signal to fintech entrepreneurs that Nebraska is open for business,” Flood said.
The act would make Nebraska a desirable location for cryptocurrency companies because it would put regulations into place, Flood said.
“We offer real regulation,” he said. “They want regulation, they want to come into the sunlight.”
But the act could be even more beneficial to Northeast Nebraskans, Flood said.
A 2016 study found that there are 35% fewer people with four year or higher degrees than state average, Flood said. Additionally, only 14% of jobs in 2022 were projected to require a four-year or higher degree.
The fastest-growing industries in the area are meat cutters and truck drivers, Flood said.
While these are both important and honorable professions, he said Northeast Nebraska must create more high-skilled jobs to keep educated young people.
These people are critical for the state's future success and contribute to the state economy and tax base, Flood said.
And if Nebraska doesn't act soon, it may miss an opportunity, Flood said.
“At the end of the day, things are moving very fast. I want to be the second state to do it, but the reality is there's probably 10 to 15 states that are considering this kind of legislation this year. So we will not be alone,” he said. “So the choice we have as a state is do we get on now, or do we wait for the rest of the states and miss out on the opportunity to have these businesses.”
Under the act, crypto banks could not loan money but would act as a transfer service, Flood said.
In 2019, Nebraskans conducted $13 million worth of virtual currency transactions. For the first three quarters of 2020 alone, that number grew to $164 million, Flood said.
“You would be surprised how many people from Norfolk have reached out to me and had experiences with cryptocurrency and had a genuine interest in it,” he said.
With the act, crypto banks would be regulated by the Nebraska Department of Banking and Finance and would have to follow the same state and federal laws traditional banks do, Flood said. Additionally, the act requires that crypto banks chartered in Nebraska have headquarters and do business in the state.
Cryptocurrency is a type of currency available only digitally that is transferred and stored digitally, too, Flood said. Many different types of cryptocurrency exist, but the most well known is probably bitcoin.