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In June 2015, New York became the first state in the U.S. to regulate virtual currency companies through state agency rule-making instead of Federal agencies as the U.S. government has not exercised its constitutional preemptive power to regulate blockchain. Following the footsteps of the New York, seven more states (Arizona, Illinois, Delaware, Vermont, California, Ohio, and Colorado) have passed the bills promoting and accepting blockchain and cryptocurrencies.
On Jan. 7, 2019, in the state Capitol in Cheyenne, Wyoming’s five top statewide officials announced an impressive legislative effort of the advancement and legitimization of cryptocurrencies and blockchain businesses in the state of Wyoming. The state of Wyoming has passed a blockchain bill that not only clarifies the legal position of digital assets but also introduces a new banking category called the “Special Purpose Depository Bank” that offers digital asset custodian services to blockchain-based businesses by the bank rather than private financial institutes.
The Wyoming legislative committee passed the bill (13-1) that classifies digital assets into three subcategory called ‘digital assets,’ ‘digital security’ and the last and most important ‘virtual currencies.’ The ultimate goal behind this classification of digital assets is to help virtual currencies achieve the same legal status as money under commercial law has.
Along with the classification of digital assets, the legislative documents of the bill also offer banking-based (rather than trust companies) custodian services, which are according to SEC’s requirements, qualified custodians for digital assets compared to trust companies/financial institutes. The banks won’t be accepting any deposit in form of digital assets, but instead these deposits would be considered as “asset under administration”. However, this decision received cold shoulders from the banking industry.
The Bill 19LSO-0608 states:
“The rapid innovation of blockchain technology, including the growing use of virtual currency and digital assets, has resulted in many blockchain innovators being unable to access secure and reliable banking services, hampering the development of blockchain services and products in the marketplace.”
Traditional banks have not been friendly to the cryptocurrencies and blockchain companies. Perhaps banks under this category can bring a necessary and valuable service to blockchain innovators and help the state to grow in the field of financial technology. As part of the pro-blockchain states in the U.S., Wyoming has already passed five blockchain friendly bills; for instance, House Bill (HB) 19 that exempts digital asset companies from the Wyoming Money Transmitter Act and HB 70 which excludes cryptocurrencies from taxes in the state.
However, this bill from Wyoming legislative committee is something that many blockchain companies and cryptocurrency users have been waiting for too long. Hopefully, more states will join the race to create a more solid and clear legal framework in the U.S. that can be built around blockchain technology and digital assets.