Garrett Sutton's Blog
October 11, 2019
Why Wyoming Will Become The New Blockchain Mecca
Blockchain technology is becoming ever more prevalent in today’s highly technological world, and Wyoming has recognized this. I was pleased to speak about Wyoming LLC’s and blockchain issues at the Wyoming Hackathon held in Laramie over the September 20th, 2019 weekend. Wyoming state officials spoke at the event and they are committed that Wyoming is a leader in this field.
The Wyoming State Legislature has passed 13 bills that will allow the state to become the gold standard for blockchain technology, far outpacing the other 49 states. From these bills, there are several noticeable advantages to both cryptocurrency investors and blockchain technology companies.
Starting in September of 2019, Wyoming will authorize banks to be “qualified custodians� for digital assets. These custodians are unique because they will respect the investors� direct ownership of digital assets.
Unlike the counterparties that exist with other asset management structures, these digital asset custodians will only be service providers to the investors. It is also worth noting that rehypothecation is illegal in Wyoming, so investors can be sure that all of their cryptocurrency investments will be theirs alone, not divided up into interests. All of these laws will ensure that digital asset owners have legal certainty to know the nature of the custodial relationship and how their assets are treated.
On top of allowing current banks to be qualified custodians, Wyoming will also be the first state to authorize a depository institution to exclusively provide banking services to blockchain and other cryptocurrency businesses. These banks are allowed to start operating as soon as March 31, 2020. To attract business to these institutions, the Equality State has crafted laws that are very favorable to cryptocurrency investors.
Wyoming has become the first state to recognize both certificated and uncertificated shares of blockchain stock. The state’s money transmitter law has exempted crypto-to-crypto transactions, and the state’s securities laws have exempted utility tokens. All of this will allow cryptocurrency trading to thrive in Wyoming.
In order for these accounts to gain Wyoming’s legal protections, all that is needed is a Wyoming LLC to hold digital assets. With this easy structure, Wyoming’s favorable laws can apply.
For extra protection, Corporate Direct provides a service called Armor-8, where we set up the Wyoming LLC and store the LLC certificate in a safe at a Wyoming bank. Because the personal property (the LLC certificate) is in Wyoming, aggressive states like California will have to acknowledge Wyoming law.
There is one wrinkle in all of this. Wyoming charges a license fee on assets held in the state. The fee is $50 or two-tenths of one mill on the dollar ($.0002), whichever is greater.
For our real estate clients who use Wyoming LLCs as holding companies, this is never an issue. The real estate owned is in LLCs outside Wyoming.
But what if you own digital assets in a Wyoming bank? A $10 million investment held in Wyoming would incur an annual fee of $2,000.
Could you hold the assets outside of Wyoming and dictate that Wyoming law applies? Yes. But one of the advantages of the new law is to use Wyoming state depositories. The license fee certainly complicates that. We have reached out to Wyoming authorities for clarification on this matter. We will let you know as soon as we hear back.
Wyoming is at the forefront of something that could have a significant impact on the rest of the 21st. Century. If you invest in digital assets, a Wyoming LLC may be right for you.
The Wyoming State Legislature has passed 13 bills that will allow the state to become the gold standard for blockchain technology, far outpacing the other 49 states. From these bills, there are several noticeable advantages to both cryptocurrency investors and blockchain technology companies.
Starting in September of 2019, Wyoming will authorize banks to be “qualified custodians� for digital assets. These custodians are unique because they will respect the investors� direct ownership of digital assets.
Unlike the counterparties that exist with other asset management structures, these digital asset custodians will only be service providers to the investors. It is also worth noting that rehypothecation is illegal in Wyoming, so investors can be sure that all of their cryptocurrency investments will be theirs alone, not divided up into interests. All of these laws will ensure that digital asset owners have legal certainty to know the nature of the custodial relationship and how their assets are treated.
On top of allowing current banks to be qualified custodians, Wyoming will also be the first state to authorize a depository institution to exclusively provide banking services to blockchain and other cryptocurrency businesses. These banks are allowed to start operating as soon as March 31, 2020. To attract business to these institutions, the Equality State has crafted laws that are very favorable to cryptocurrency investors.
Wyoming has become the first state to recognize both certificated and uncertificated shares of blockchain stock. The state’s money transmitter law has exempted crypto-to-crypto transactions, and the state’s securities laws have exempted utility tokens. All of this will allow cryptocurrency trading to thrive in Wyoming.
In order for these accounts to gain Wyoming’s legal protections, all that is needed is a Wyoming LLC to hold digital assets. With this easy structure, Wyoming’s favorable laws can apply.
For extra protection, Corporate Direct provides a service called Armor-8, where we set up the Wyoming LLC and store the LLC certificate in a safe at a Wyoming bank. Because the personal property (the LLC certificate) is in Wyoming, aggressive states like California will have to acknowledge Wyoming law.
There is one wrinkle in all of this. Wyoming charges a license fee on assets held in the state. The fee is $50 or two-tenths of one mill on the dollar ($.0002), whichever is greater.
For our real estate clients who use Wyoming LLCs as holding companies, this is never an issue. The real estate owned is in LLCs outside Wyoming.
But what if you own digital assets in a Wyoming bank? A $10 million investment held in Wyoming would incur an annual fee of $2,000.
Could you hold the assets outside of Wyoming and dictate that Wyoming law applies? Yes. But one of the advantages of the new law is to use Wyoming state depositories. The license fee certainly complicates that. We have reached out to Wyoming authorities for clarification on this matter. We will let you know as soon as we hear back.
Wyoming is at the forefront of something that could have a significant impact on the rest of the 21st. Century. If you invest in digital assets, a Wyoming LLC may be right for you.
