Wyoming has an interesting history with blockchain technology. In the past few years, the state has done an about-face after Coinbase announced in 2015 it would stop doing business in Wyoming due to an “impractical state law.”
That law, the Wyoming Money Transmitters Act, which as passed years before Bitcoin emerged, required companies to have cash, CDs, securities or other investments equal to the money that’s transferred digitally. The act was meant to protect consumers from losses, which, in the case of cryptocurrency could occur during a cyberattack.
After deliberation over the interpretation of the law and its consequences for cryptocurrency and blockchain businesses, the state moved from a position of concern over blockchain risks to one of building a framework that would create opportunities. Wyoming passed House Bill 19 last year, amending the Money Transmitter Act to exempt virtual currency from the state’s requirements. Wyoming also passed House Bill 70 states that entities that develop, sell, or facilitate the exchange of open blockchain tokens aren’t subject to securities and money transmission laws, as long as they meet verification and other specified requirements.
And the state didn’t stop there. Additional 2018 legislation includes:
- House Bill 101: amending the state’s Business Corporations Act to allow blockchain-based records storage, shareholder management, and shareholder votes
- House Bill 126: allowing LLCs to develop decentralized governance or to reduce risks associated with token ownership
- Senate File 111: creating property tax exemptions for cryptocurrency
Legislation this year includes:
- House Bill 57: “creating the financial technology sandbox for testing of financial products and services in Wyoming” exempting innovators from licensing for up to three years.
- House Bill 74: allowing the creation of special banks to serve cryptocurrency and blockchain businesses.
- Senate File 125: establishing property rights for owners of cryptocurrency and other virtual assets and facilitates banks holding virtual assets in trust.
What Does It All Mean for Blockchain Companies? Welcome to Wyoming.
It’s evident that the Wyoming legislation will help create blockchain-friendly business environment. An article from the Wyoming Economic Development Association points out that some US businesses have considered relocating to other countries to escape burdensome regulations, but they can now find a viable alternative in Wyoming, allowing them to remain in the US and operate strategically — with a “firm legal footing.”
In an interview with Forbes, Steve Lupien, executive director of the Digital Asset Trade Association, says Wyoming’s ultimate goal has been to create more jobs, and it appears to be working. Although there are no stats available on exactly how many blockchain companies are relocating to Wyoming, BeefChain, a rancher-to-retail supply chain solution for beef and sheep, has established its business there, and IOHK, the company behind Cardano ADA, is moving from Hong Kong to Wyoming. The state’s position on blockchain has also captured the interest of several banks.
The full extent to which the legislation attracts new business won’t be evident for some time, however. Lupien comments that it may be ten years or more before blockchain innovation in Wyoming makes a significant impact on the state.
Setting the Bar
Wyoming has influenced a number of other states to reevaluate their regulations with respect to virtual currency and assets, and new capabilities that blockchain offers. But as Caitlin Long, co-founder of the Wyoming Blockchain Coalition, points out in her Forbes article, “No other state is likely to catch up to Wyoming — it’s a very tall order for any legislature to enact 13 bills on a single topic in a compressed time frame, especially when another state has already claimed first-mover advantage.”