A grassroots group, the Wyoming Blockchain Coalition, has garnered significant momentum to pass a package of legislation that would bring significant benefits to both the blockchain community and the State of Wyoming.
The package of blockchain bills, which will be introduced during the upcoming session in February, will build on two characteristics of Wyoming that make it particularly attractive to the blockchain industry: zero corporate income or franchise taxes, and strict privacy laws governing LLCs formed in the state.
Companies don’t need to move to Wyoming physically to take advantage, just as most Delaware corporations aren’t located in Delaware. But but there are real reasons why businesses might want to move there. Cheyenne, the state capital, has tremendous fiber-optic bandwidth and cheap power that is already attracting major data centers to locate there, for example.
And our initiative has active support by officials at the state’s only university. So Wyoming has “good bones” upon which to build a regulatory framework to attract the blockchain sector.
The blockchain community is likely to be most excited by one of the bills just introduced, H.B.0070, which would exempt tokens issued on an open blockchain from Wyoming’s money transmitter and securities laws, as long as the token has not been marketed as an investment and is exchangeable for goods or services. This bill would also exempt token exchanges (or people exchanging tokens) from being deemed broker/dealers under Wyoming law. The bill has garnered senior co-sponsors, including the Speaker of the House.
As always, whether a token would be considered, under Wyoming law, either a security or exempt pursuant to the new legislation, would be a facts-and-circumstances analysis. Businesses should seek their own legal counsel.
We view non-securities blockchain tokens as a new asset class that is neither money nor securities, and therefore believe existing money transmitter and securities regulations should not apply.
In many cases, for example, such blockchain tokens are simply prepaid software licenses. If tradeable gift cards and prepaid cell phone minutes are not regulated as money or securities, why should prepaid software licenses fall into those categories?
In many states, they do. In Wyoming, they should not, and we are optimistic that the legislature will agree.
Wyoming’s consumers will be protected by its strong anti-fraud and consumer protection laws, which we believe are sufficient to deter bad actors from doing business in the state. And businesses should analyze whether federal securities laws would still apply.
The Wyoming Blockchain Coalition also supports two other bills as part of the package for the February session.
The so-called “bitcoin bill,” H.B.0019, proposes to exempt virtual currencies from Wyoming’s money transmitter laws. Alone, this legislation will allow businesses that pulled out of Wyoming in 2015, such as Coinbase, to operate in Wyoming. This will add a vital new industry to the State’s financial sector. It, too, has garnered many co-sponsors, including the President of the Senate…
Read Full: A Haven for Blockchain: The Case for Wyoming