As numerous states propose and enact legislation focused on blockchain technology and cryptocurrencies, in 2018, no state has been more aggressive in this space than Wyoming. In March, the state legislature passed several bills impacting cryptocurrency businesses, each of which is designed to position Wyoming as a blockchain-friendly environment for businesses.
- B. 0019: This bill removes a significant hurdle by amending the Wyoming Money Transmitter Act to exempt the buying, selling, issuing or taking custody of virtual currency from licensing requirements. “Virtual currency” is defined in the bill as digital representations of value that are used as a medium of exchange, unit of account or store of value, and which is not recognized as legal tender by the United States government.
- B. 0070: House Bill 0070, known as the “Utility Token Bill,” provides exemptions from state securities and money transmissions laws for developers, sellers and persons who facilitate the exchange of “open blockchain tokens.” To qualify for the exemption, the token cannot be marketed as an investment and must only be exchangeable for goods, services or content.
- F. 0111: This bill exempts virtual currencies from property taxation.
- B. 0101: House Bill 0101 amends the Wyoming Business Corporations Act to authorize corporations to use a blockchain or other distributed electronic database to create, record and store corporate records.
- B. 0126: This bill authorizes the formation of a “series” limited liability company (LLC) in Wyoming. This allows an LLC to create subsidiary entities for asset classes to shield each sub-LLC from the risk of liability from the others.
Among the more noteworthy elements of these new laws is House Bill 0070’s exemption from state securities and money transmission laws for utility tokens – referred to in the act as “open blockchain tokens.” Much of the attention at the federal level has focused on regulation of cryptocurrencies and tokens marketed through initial coin offerings (ICOs) by the Securities Exchange Commission (which considers such coins securities) or by the U.S. Commodity Future Trading Commission (which regulates such coins as commodities). The Wyoming act instead focuses on utility tokens that are specifically used as a medium of exchange and not marketed as an investment, treating such tokens as a distinct asset class that is neither a security nor money.
While federal regulators will continue to closely monitor developments in the cryptocurrency space, states like Wyoming are seeking to fill the void and position themselves as offering a pro-blockchain regulatory environment to attract businesses and facilitate innovation.