author: adv. Justyna Maria Bartoszek
Although much is said at the federal level of the United States of America about digital resources and the need for their regulation, a comprehensive regulation covering the entire territory of America has not yet been adopted. In the absence of nationwide, binding solutions, some states decide to introduce regulations within their competence at the state level. One of such places is Wyoming, i.e. a state that has already passed a whole package of regulations regarding innovations based on blockchain technologies and the idea of decentralization.
Wyoming, a northwestern state with a population of about 580,000, the smallest in terms of population of any state, has become a haven for cryptocurrencies and digital assets since 2019. Wyoming provides clear – and beneficial – legal, regulatory and tax solutions. In addition, Wyoming provides an investor privacy regime for investment vehicles focused on digital assets, including NFTs, cryptocurrencies, digital certificates and other similar assets.
Wyoming is gaining a reputation as the "Wild West of Cryptocurrencies" for two reasons. First of all, it was one of the first states in America to enact laws that are friendly to cryptocurrency trading and decentralized technologies. Secondly, these regulations and regulatory certainty and low tax attract many crypto companies to the state.
To date, Wyoming has passed 13 pieces of legislation that create a complete regulatory environment for entities relying on decentralized technologies. These acts are:
We are talking about 13 legal acts adopted at the turn of 2018-2019:
Bill no. HB0019 - Wyoming Money Transmitter Act – Virtual Currency Exemption;
Bill no. HB0070 - Open Blockchain Tokens Exemption;
Bill no. HB0101 - Electronic Corporate Records;
Bill no. HB0126 - Limited Liability Companies - Series;
Bill no. SF 0111 - Property Taxation Digital Currencies
Bill no. HB0057 - Financial Technology Sandbox Act;
Bill no. HB0062 - Wyoming Utility Token - Property Amendments;
Bill no. HB0070 - Commercial Filing System;
Bill no. HB0074 - Special Purpose Depository Institutions;
Bill no. HB0113 - Special Electric Utility Agreements;
Bill no. HB0185 - Corporate Stock Certificate Tokens;
Bill no. SF0028 - Banking Technology and Stock Revisions
Bill no. SF0125 - Digital Assets Existing Law.
The key advantages of Wyoming's developed legislation are:
first, the legislation contains clear definitions of the technology and divides blockchain-based assets into three different categories of personal property;
secondly, Wyoming is the first state to regulate the operation of the DAOs and legally recognize it as a form of Limited Liability Company;
thirdly, Wyoming law allows for the creation of special-purpose depository banking institutions that enable banks to provide customers with regular banking services as well as blockchain-based services.
Apart from the aforementioned regulatory aspects, Wyoming is an attractive jurisdiction for Special Purpose Vehicles (“SPVs”) based on decentralized technologies, due to the following:
Wyoming is one of the few US states with no income tax;
companies headquartered in Wyoming can be formed fully online, by both individuals (US citizens or not) and legal entities, from anywhere in the United States or outside, and then freely structured in the incorporation documents;
companies headquartered in Wyoming may be "affiliated" vertically and horizontally with other companies regardless of their location.
Wyoming's crypto-friendly legislation provides better consumer protection and investment security, as well as an easier way to acquire digital assets. The developed regulations give crypto companies a better understanding of their legal status and potentially reduce their operational risk. Less risk not only encourages consumers to invest and engage in crypto technology, but also encourages crypto companies to keep going and innovate towards the future of digital asset technology.
Sources:
http://www.flabizlaw.org/files/Wyoming%20Blockchain%20Legislation%20Summary%20Review.pdf (access: 20 December 2022).
E. Holley, Wyoming's Digital Assets Law and How to Use it, Lexology, 18 Stycznia 2022, source: https://www.lexology.com/library/detail.aspx?g=72a5d03a-98c2-45d5-8bdd-ff98ac7b9730 (access: 20 December 2022).