Wyoming has made it a point to undergo a transformation into one of the most crypto-friendly states in the United States, to feed the investment flow and support innovation.
Wyoming is a mountain state where the spirit of Wild West is still in the air. With lots of farms, parks, and beautiful scenery, it is the best place for those who are tired of the hustle and bustle of city life.
However, the state would like to begin shedding this countryside reputation and reinvent itself as a hub of innovations and become the capital of the blockchain and cryptocurrency industry in the U.S.
From Cowboys to Tech Guys
Wyoming has proposed a bill that will clarify the legal status of digital assets and allow banks to offer custody services for digital assets. Considering that the regulatory uncertainty has been one of the negative factors which have plagued the industry through 2018 and beginning of 2019, this legislation will become a significant step towards legalizing cryptocurrency related businesses in the U.S.
Wyoming is betting on the nascent industry in hopes to secure a reputation as the best place for blockchain businesses in the U.S. If successful, it will become a regulatory home for the digital asset custody industry and a magnet for fintech start-ups and cryptocurrency companies. They will bring in a steady flow of investments and a bit of excitement to the slow-paced life of one of the most sparsely populated States in the U.S.
The bill proposes to divide digital assets into three distinct categories: digital securities, digital assets, and virtual currencies. The classification is nothing new, but it is a big advancement considering that now their regulatory status is mostly uncertain.
Moreover, once adopted, the bill will put virtual coins in the same league as fiat money under the Uniform Commercial Code within the State. According to the Code, money transfers are free and clear as long as the receiving party does not conspire to avoid the lien.
Basically, it means that cryptocurrency will not need an intermediary to be legal, as long as it is in accordance with the peer-to-peer nature.
Custody for Digital Assets
The other important aspect of the bill is related to custody services. It will allow banks in Wyoming to be able to provide enhanced supervision for digital asset custody as long as they comply with the Securities and Exchange Commission requirements for ‘qualified custodians.’
Moreover, banks will not have to hold cryptocurrency themselves, acting more as an asset under management service rather than a bank deposit.
Having a bank as a custodian rather than a trust company, the blockchain firms like Fidelity Investments and Bakkt with its upcoming futures exchange will be able to operate in all 50 states. Also, the SEC prefers using banks as a custodial service over trusts as the former has explicit wind-up provisions in case of insolvency.
According to Caitlin Long, a co-founder of the Wyoming Blockchain Coalition, the state authorities saw the advantages of becoming a home for the new and innovative industry and seized the opportunity.
Do you think Wyoming will succeed in becoming the cryptocurrency capital of the United States? Let us know your thoughts in the comments below!