More than two years ago, an alum of the University of Wyoming attempted to personally fund an endowment through a Bitcoin donation and learned the school was unable to accept the donation due to an outdated law restricting cryptocurrency use. This experience generated a great deal of discussion in the state. In response, the Wyoming Blockchain Coalition (Coalition) was eventually formed with a goal/mission to educate Wyomingites and advocate for changes in Wyoming law to allow cryptocurrency, blockchain technology, and business entities to be used for these types of transactions.
Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Blockchain is a new form of database technology that enables multiple parties to share a single “golden copy” of data and trust that it is valid. Bitcoin was the first application of blockchain technology. As Bitcoin gains popularity, more companies have started accepting the cryptocurrency.
The Coalition successfully persuaded the legislature to pass five bills specific to blockchain technology in the 2018 session. Some of the key benefits for Wyoming are:
Wyoming Money Transmitter Act-virtual Currency Exemption (HB0019/HEA1):
- Amends Wyoming’s Money Transmitters Act to exempt virtual currency (cryptocurrencies)
- Wyoming will not require a license for someone to use cryptocurrency as a medium of exchange.
Open Blockchain Tokens-Exemptions (HB0070/HEA27):
- Amends Wyoming’s Securities laws to exempt open blockchain tokens from securities regulation
- Requires open blockchain tokens to meet a set of criteria to qualify
- Federal law would still apply to any open blockchain tokens sold/exchanged between Wyoming and other states
- Open blockchain tokens are capital fundraising devices that are also exchangeable for a tangible object. An example of this are prepaid cellphone minute cards
Electronic Corporate Records (HB0101/HEA22):
- Amends Wyoming’s Business Corporations Act to allow the use of blockchain and other electronic record keeping to meet corporate requirements for businesses organized in Wyoming
Property Taxation-Digital Currencies (SF0111/SF34):
- Exempts virtual currency from property taxes
Limited Liability Companies-Series (HB0126/HEA24):
- Amends Wyoming’s LLC Act to permit Series LLCs (concept that has been used in other states for decades)
- Allows someone to create a parent LLC who owns an unlimited number of subsidiary LLCs
- Advantage is that you do not have to separately file to create each LLC, they are created one time
- Streamlines incorporation
While the overall economic impact from these Wyoming legislature changes remains to be seen, the goal is to establish Wyoming as an attractive state in the blockchain development industry. Increased database technology opportunities have the potential to improve business transactions, including Wyoming's traditional industries. The laws will continue to encourage more entities to locate in Wyoming for the purpose of developing blockchain-based technologies. The laws also aim to make Wyoming more competitive in attracting a wider variety of technology companies.
Holland & Hart attorneys Jeff Pope and Isaac Sutphin are members of the Coalition. They assisted in drafting, revising, and advocating for several of the 2018 bills that the Wyoming legislature passed, worked closely with the bills’ sponsors; and they presented at several legislative committee hearings. Holland & Hart teams will leverage the firm’s resources to help potential blockchain clients form entities, comply with securities laws, and meet other needs.
For more information about the impact of the new bills, or guidance on blockchain opportunities in Wyoming, contact Jeff Pope (jspope@hollandhart.com) or Isaac Sutphin (insutphin@hollandhart.com).
About Wyoming Blockchain Coalition:
The mission of the Wyoming Blockchain Coalition is to educate Wyoming citizens about the power of blockchain technology to cut costs, streamline administrative processes and spur entirely new businesses in Wyoming.