As America’s least populated state, it’s perhaps a surprise that Wyoming is leading the way in terms of blockchain regulation. While Congress grapples with the potentially transformative effects of decentralized digital ledgers, the Equality State has introduced a total of thirteen new blockchain laws aimed at simplifying development and clarifying the legal treatment of digital assets.
Working on a ‘chain gang
Prior to exploring those laws in depth, we should take a moment to summarize the blockchain for industry newcomers and people who believe it’s purely related to Bitcoin. The blockchain was indeed created to record Bitcoin transactions, before heading out into far more exciting and diverse directions. However, the same principles apply for any deployment. This is a publicly visible digital ledger, which permanently records events or transactions with no scope for subsequent editing. A time-stamped update is logged whenever a new event happens. The blockchain could store irrevocable records of land or intellectual property ownership, electoral voting, ecommerce transactions, and crowdfunding campaigns, among many other potential uses.
However, while the State of Washington recently passed a bill recognizing and protecting the legal status of distributed ledgers, politicians in D.C. have struggled to wrap their heads around the complexities and nuances of blockchain laws. Individual states have stepped into the void, and Wyoming is the first to develop a comprehensive legal framework supporting blockchain development at both a personal and corporate level.
Block and load
While a full outline of all thirteen new laws would result in a very long (and dull) article, these are the most significant aspects of Wyoming’s new blockchain laws:
- Authorization for banks to become qualified custodians of large-scale digital assets. From September 2019, banks in Wyoming will be able to act as custodians for digital assets, without any claim to ownership. Presently, securities are only indirectly owned, but following this legislation, it will be possible to retain direct ownership of digital assets under the custody of a bank.
- Acknowledgment of how digital assets are directly owned but stored remotely, and confirmation of direct property rights for owners of digital assets. Under the legislation, these range from virtual currencies to digital securities.
- Legal support for a state-chartered deposit-holder, providing banking services to blockchain operators. A bank could be created inside a year offering 100% reserves to business depositors, albeit lacking any lending capacity.
- Up to three years’ regulatory relief for fintech startups and innovators. Similar fintech sandboxes have been established around the world, but this one has been tailored towards companies offering blockchain services.
Will this establish a precedent across America?
The answer to that question appears to be an emphatic yes, with a dozen other states attempting to bring through modified and simplified versions of Wyoming’s blockchain laws. However, none has attempted to cover as much ground, and they will all be following in established footsteps. In the meantime, as the undisputed trailblazer, Wyoming’s welcoming approach to this burgeoning tech sector is likely to attract blockchain companies and entrepreneurial individuals alike.
Is residency required to capitalize on these laws?
There’s likely to be a flood of investment heading to the Equality State, but residency isn’t required for Wyoming’s new legislation to be applicable to your own activities. Setting up an LLC, trust, foundation or entity in the state should suffice, as will transacting with a company that’s either based here or which stores digital assets here. You could even stipulate that Wyoming law applies to a blockchain-related contract, though we’d recommend taking legal advice first.