The signing of the bills drafted by the Wyoming Blockchain Task Force and enacted by the State Legislature.
How “The Equality State” may pave the way for national adoption of DLT and crypto
By Alissa Fleck
As much as they’ve been heralded, crypto and blockchain technologies have also been met with resistance at all turns. Among U.S. states, however, Wyoming has been a vanguard of blockchain legislation. While Wyoming is not the only — nor even the first — state to pass blockchain-friendly laws, it has by far enacted the most. The benefits of these laws may also be felt well beyond state boundaries.
To date, Wyoming has enacted 13 blockchain-enabling laws, with the goal of making it easier to invest in, hold, innovate in and regulate digital assets. Deciphering any legislation can be tricky enough without all the byzantine tech parlance, so ICO Ranker has crafted a more digestible explainer of what these laws are expected to accomplish.
The classification of digital assets as personal property
This legislation characterizes digital consumer assets, securities and currency as intangible personal property, and applies the same legal framework that applies to fiat currency. This means owners of digital assets of all types can be confident the law will unambiguously reflect the way they’re actually using these assets.
Wyoming State House Representative Mike Yin told ICO Ranker he sees the bill around property rights (SF0125) as the most useful piece of blockchain legislation, at least for consumers. “It lays out what is and isn’t a digital asset and how it can be used to provide the clarify necessary to do business with [digital assets],” he said.
Creation of a regulatory sandbox for financial technology
The creation of a fintech sandbox provides more regulatory leeway, and allows a person to “make an innovative financial product or service available to consumers during a sandbox period” by waiving certain existing requirements that may have originally prevented its creation. A regulatory sandbox fosters greater innovation by protecting entrepreneurs from pre-existing laws that may have stifled innovation for up to three years.
State Representative and Wyoming Blockchain Taskforce Member Caitlin Long said businesses could benefit from this legislation in a number of ways, including by legally domiciling or physically locating their businesses in Wyoming. Long also noted that non-residents of Wyoming can still take advantage of Wyoming’s blockchain laws by simply invoking them (though you should always consult your own attorney first).
Authorization of basic banking services for blockchain businesses
Providing a “secure and reliable” banking institution for innovators that meets greater compliance challenges is critical to harboring an environment of continued innovation in the digital asset space. This legislation designates these banking institutions as corporations that have 100 percent reserves at all times and do not participate in lending activity.
These institutions could be in place by March 21, 2020.
Creation of qualified custodians (banks) for digital assets
While traditional publicly traded securities are owned indirectly, banks that serve as custodians for customers’ digital assets will be required to respect the “direct ownership nature” of digital assets. Therefore, while these assets will be temporarily out of the owner’s control, it is only under the legal classification of a bailment.
Wyoming Banks can run these operations beginning September 1, 2019.
Additionally, Wyoming’s legislation:
- ensures crypto-to-crypto transactions are exempt from money transmitter laws;
- recognizes uncertificated and certificated blockchain shares of stock;
- exempts utility tokens from state securities laws;
- allows electric utilities to negotiate directly with miners; and more.
Wyoming has also set up its own court for the purpose of resolving disputes specific to complex business, which is important as the state’s ability to handle disputes has been a concern leveraged against the new legislation, according to Long.
Most of the work in drafting these bills is conducted in the interim by taskforce members, said Yin, before they’re brought to the full legislature. When considering bills, the ultimate goal is to “protect consumers and the reputation of Wyoming to ensure these business are legitimate and to try to avoid tokens that are intended to scam consumers,” he added.
There’s one more year of the task force, according to Yin, so the legislature — and public —could expect to see more bills around blockchain technology introduced in the next year.