Wyoming has recently passed a series of laws that are favorable for the support of blockchain, cryptocurrency, banking, corporate governance in the United States. Below is a summary overview of each of those individual laws and the high-level relevance to the market.
Our team of expert advisors and partners can assist your company leverage these policies to help in your Blockchain, AI, data, and other emerging technology related programs. This article is for informational purposes only. Please consult with proper legal counsel as appropriate.
SF 104 – Wyoming Chancery Court
An ACT relating to courts; creating a chancery court; providing for jurisdiction; providing for funding of the chancery court; providing for adoption of rules for the chancery court; providing for the terms and appointment of chancery court judges; providing for the salary and expenses of chancery court personnel; authorizing positions; providing appropriations; and providing for an effective date.
HB 70 – Commercial Filing System
HB 70 “Commercial Filing System” act authorizes the Secretary of State, not later than December 31, 2021, to develop and implement a blockchain based filing system for business entity and commercial filings otherwise required by law to be filed with the Secretary of State, including business entity formations and annual reports, as well as Uniform Commercial Code financing statements. Effective immediately.
HB 70 sets the framework for blockchain-based corporate formation, records, and management.
HB 57 – Financial Technology Sandbox
HB 0057 or “The Financial Technology Sandbox” provides an opportunity for blockchain companies testing or operating innovative financial products or services to run in a “financial sandbox” for two (2) years, and the ability to extend for an additional one (1) year. HB 57 will be effective on January 2, 2020.
The financial technology sandbox (HB 0057) is beneficial to companies interested in ‘fast-tracking’ program pilots, product development and market testing, through an application with the State to receive a series of waivers approved through the state agencies including Wyoming Banking Commission and Wyoming Securities Commission.
SF 28 – Banking Technology and Stock Revisions.
SF 28 authorizes financial institutions to issue any securities authorized for the corporate entity under existing corporate law, including both voting and non-voting shares. It also permits banks to maintain corporate records, including records relating to shareholder records and capital impairment notices. There is additional clarification allowing the identity of bank shareholders to be managed using data addresses. SF 28 becomes effective on 7/1/2019
HB 74 – Special Purpose Depository Institutions
HB 74 authorizes the formation of a “special purpose depository institution” as a new form of a bank (charter). The bank is required to maintain 100% of its depository liabilities as liquid assets to limit risk and prohibits lending. The act also requires minimum deposits by a bona fide business. FDIC insurance is authorized but is not required. The Bank must be compliant with all other applicable federal and state laws.
This new bank makes it possible for blockchain companies to functionally operate in the United States (as a jurisdiction) with less risk of forced account closure. Critical to any business operations, banking services are fundamental for day-to-day activities such as payroll and pay vendor services in fiat.
SF 125 – Digital Assets-Existing Law.
SF 125 addresses how digital assets are defined in the existing law while enabling those assets to be managed by a bank, including the Special Purpose Depository Bank as defined in HB 74.
Current law divides digital assets dividing these assets into three categories of intangible personal property and classifying these assets within the Uniform Commercial Code (UCC) as follows: 1) Digital consumer assets (UCC: general intangibles); 2) Digital securities (UCC: securities and investment property); and 3) Virtual currency (UCC: money).
SF 125 further clarifies and defines ‘custodial services’ and is consistent with what the Securities and Exchange Commission’s has for qualified custodian requirements. SF 125 becomes effective 7/1/2019
HB 62 – Wyoming Utility Token Act-Property Amendments
HB 62 The “Wyoming Utility Token Act – Property Amendments” provides provisions enacted in HB 0070 (2018) with additional clarifications. The act classifies specific open blockchain tokens (“utility tokens”) with consumptive characteristics as intangible personal property and provides that these tokens are not subject to a securities exemption. Grants new oversight and investigatory authority to the Secretary of State regarding utility tokens. Effective 2/28/2019. HB 62 provides important clarifications on the 2018 legislation.
HB 113 – Special Electric Utility Agreements.
HB 113 allows utility companies to negotiate electricity rates with blockchain companies and others without approval from the Wyoming Public Utility Commission. The fact that Wyoming already provides some of the lowest cost of electricity in the country, this is beneficial to high-power consuming operations like data centers and miners.
HB 185 – Corporate Stock-Certificate Tokens.
HB 185 authorizes “corporate stock-certificate tokens” to be issued by business entities such as a corporation or limited liability company. The stock certificates are able to be issued in the form of electronic certificate tokens.
“Certificate tokens” are defined as an electronic representation of a share of stock which contains specific information required under existing law for stock certificates (e.g., the name of the stock recipient and the number and type of shares) and entered into a blockchain or other secure, auditable database HB 185 becomes effective on 7/1/2019
SF 156 Medical Digital Innovation Sandbox
SF 156 authorizes the Department of Health, upon receipt of an application & consumer protection bond, to waive specified statutes or rules allowing persons to make an innovative medical digital assessment product or service available to consumers in the medical digital innovation sandbox program.
Only innovative medical digital assessment products or services which cannot be made available under existing law are eligible. Approved Programs can be tested in the sandbox up to 2 years, with the possibility of a 1-year extension.
Requires authorized persons utilizing sandbox to maintain comprehensive records relating to the product or service
Requires Department to adopt rules to implement the act & issue necessary orders to enforce the act including revoking access.
That portion of the act requiring the Department to promulgate rules is effective immediately. The remainder is effective 1/1/20
HB 19 Wyoming Money Transmitter Act-Virtual Currency Exemption
Provides an exemption for virtual currency (e.g., Bitcoin, Ethereum, etc.) used within Wyoming from money transmitter laws and regulations.
HB 70 Open Blockchain Tokens-Exemptions
Provides that a person who develops, sells or facilitates the exchange of an open blockchain token (a “consumer” or “utility” token) is not subject to specified securities and money transmission laws.
HB 101 Electronic Corporate Records
Provides for the maintenance of corporate records of Wyoming entities via blockchain so long as electronic keys, network signatures and digital receipts are used.
HB 126 Limited Liability Companies Series
Modifies Wyoming’s corporate code to permit the formation of “Series LLCs.” The intent of this legislation is to promote Wyoming as a jurisdiction of choice for securities formation and to compete with Delaware and Nevada for corporate registration revenue.
This act is interesting when combined with the HB 0126 Series LLC legislation from 2018 and provides the legal structure for DAO’s and other distributed business models.
SF 111 Property Taxation-Digital Currencies
Provides that virtual currency is not subject to taxation as “property” in Wyoming.