Wyoming lawmakers pass bill prohibiting courts from forcing disclosure of digital asset

The legislature in Wyoming recently approved a measure that, with one tiny exception, would make it illegal for judges in the state to compel individuals to provide the secret keys to their digital assets.

On February 15, the measure was approved by the Wyoming House of Representatives with a vote of 41-13, one day after receiving approval from the Wyoming Senate with a vote of 31-0.

The new legislation is scheduled to go into effect on July 1 of this year if Wyoming Governor Mark Gordon signs the measure into law.

According to the soon-to-be-enacted law in the state of Wyoming, “No person shall be compelled to produce a private key or make a private key known to any other person in any civil, criminal, administrative, legislative, or other proceeding[s],” in Wyoming. “No person shall be compelled to produce a private key or make a private key known to any other person.”

The legislation encompasses any private keys that are connected to a person’s digital assets, digital identity, or any other interests or rights that are provided by the private key.

The one and only exception to this rule is in situations in which a public key is either not accessible or is unable to divulge specifics of a digital asset, digital identity, or any other interest or right.

However, the act also states that the new law will not prevent anyone from being compelled “to produce, sell, transfer, convey, or disclose a digital asset, digital identity, or other interest or right” that a private key could provide access to. This provision states that the new law will not prohibit the disclosure of digital assets, digital identities, or other interests or rights.

In addition to this, it does not protect an individual from being forced to “disclose information about the digital asset, digital identity, or other interest or right.”

The new statute will be known as “Production of private keys; prohibition,” and its number will be W.S. 34-29-107.

The law pertaining to private keys is found in Chapter 29, which is titled “Digital Assets.” This chapter is a subset of Title 34, which is titled “Property, Conveyances, and Security Transactions.”

The private key legislation has been in the works since as early as September 2019, and the passage of the bill comes as a result of the law’s progress.

Wyoming has a long history of being recognized as one of the states in the United States that is most favorable to the use of cryptocurrencies.

It was the first state in the United States to declare a decentralized autonomous organization (DAO) as a limited liability company (LLC) in July 2021. Additionally, it had previously considered a state-issued stablecoin in February 2022; however, it appears that those endeavors haven’t progressed very much since then.


Tagged : / / / / / / / /

Lummis says Fed is ‘violating the law’ with Wyoming blockchain bank delays

Republican senator for Wyoming Cynthia Lummis has argued that the Federal Reserve is “violating the law” by delaying the processing of applications from crypto-native banks to receive accounts at the central bank.

In a Nov. 30 op-ed for the Wall Street Journal, Lummis claimed that the Fed was treating the Special Purpose Depository Institutions (SPDIs), also known as ‘blockchain banks’, in her home state unfairly. She called on her Republican colleagues to withhold support for Fed chair Jay Powell who was reappointed by President Biden on Nov. 23.

In Feb. 2019, Wyoming state legislature approved SPDIs to serve businesses unable to secure banking services from the Federal Deposit Insurance Corporation (FDIC) due to their dealings with crypto.

In 2020, two Wyoming SPDIs Kraken and Avanti received their bank charters. Shortly after, they applied for master accounts with the Federal Reserve Bank of Kansas City. Their applications are yet to be approved.

The state has been in discussions whether SPDIs should be considered banks under federal law. In the article, Lummis claimed that SPDIs should, “without a doubt,” be considered banks under federal law and that “Wyoming checked every box.” She added that SPDIs meet the standard set by Congress in the Federal Reserve Act for what constitutes a bank.

She said that “in fact the Fed is violating the law by delaying” issuing the SPDIs approval, citing federal courts which have stated that the Fed “has a duty to give payment system access to all banks and credit unions conducting legal activities.”

Related: ‘Thank God for Bitcoin,’ Cynthia Lummis says on US debt limit raise

On Oct. 7, Lummis filed documents revealing that she had purchased an unknown amount of Bitcoin (BTC) on Aug. 16 worth somewhere between $50,001 and $100,000.

Lummis made the purchase less than two weeks after she and other senators attempted to gain support for a pro-crypto amendment into President Joe Biden’s infrastructure bill.


Tagged : / / / / /

How Wyoming Became a Crypto Hub

Key Takeaways

  • Wyoming has passed several laws that have laid the foundations for the cryptocurrency industry to flourish.
  • The state offers tax exemptions and a welcoming regulatory climate for crypto holders and businesses.
  • It also launched a pioneering banking charter for the sector and legally recognizes DAOs.

Share this article

Wyoming is fast becoming the beacon for crypto adoption in America, having established a mature legal framework needed for the digital assets industry to flourish. 

Wyoming’s Lead in Crypto Regulation

Wyoming is quickly becoming America’s leading crypto hub. In recent years, pro-crypto regulations and zero corporate and personal state income taxes have attracted the attention of some of crypto’s biggest firms, including Ripple and Kraken. 

About 24 crypto-related laws have been passed in the last few years, resulting in Wyoming becoming the most crypto-friendly state in the U.S. Following Wyoming’s lead, other states like Texas, Nevada, North Dakota, Illinois, and Montana have begun passing crypto-friendly bills.

In 2018, the House Bill 19 (HB 19) exempted cryptocurrencies from the money transmission licensing requirements in the state. Furthermore, anyone who develops, sells, or facilitates the exchange of a blockchain token was made exempt from money transmission laws. 

Other states like New York mandate that blockchain-based cryptocurrency operators get a money transmission license called BitLicense. Some applicants have difficulty obtaining the license. Wyoming’s Financial Technology Sandbox, meanwhile, lets blockchain startups test new products and technologies without having to worry about regulations.

Wyoming has also waived crypto-related taxes at the state level. While the state recognizes cryptocurrencies as property, The “Crypto Property Tax Exemption Bill” (SF111) passed in 2018 exempted the asset class from property taxes.

This means that crypto transactions made by Wyoming-based firms and individuals do not get taxed at the state level. However, crypto activities in the state are subject to separate federal taxes. In 2019, another critical legislation called Wyoming Utility Token Act (HB 62) was passed. This law declared that tokens issued on a blockchain with “specified consumptive characteristics” would be exempt from securities laws and only considered as intangible personal property.

Wyoming Welcomes Crypto Banks 

To date, U.S. regulators have shown reluctance to allow banking services for the crypto sector. As a result, many crypto startups have struggled to get basic bank account services for operations across the country.

Wyoming, however, introduced a new banking charter for the industry to change how crypto banking is carried out. In 2019, the state passed a bill called HB0074 giving birth to crypto banks known as special-purpose depository institutions (SDPIs).

The Wyoming Division of Banking has granted four banking charters so far, but several more are expected in the future. 

SIMETRI Research
Sanctor Turbo Demo Day

In 2018, the leading crypto exchange Kraken was the first firm to become an SDPI, followed by Avanti Finance, Wyoming Deposit and Transfer, and Commercium Financial. These state-chartered entities are permitted to provide critical financial services to crypto-based businesses and offer deposit-taking, custody, and fiduciary for cryptocurrencies. 

SDPIs are only for business depositors, are required to have 100% reserves at all times, and cannot lend. Unlike most traditional banks, FDIC insurance is not required. 

Wyoming has a history of being a pioneer in creating novel corporate entities. It was the first jurisdiction worldwide to introduce the concept of Limited Liability Corporation (LLC) in 1977, which later became one of the most-used corporate structures in the world. Recently, the state updated its original version of an LLC.

In 2021, Wyoming passed Bill 38 into law, allowing decentralized autonomous organizations (DAOs) to register as a limited liability company (LLC). In doing so, Wyoming laid the foundations for U.S.-based DAOs to be legally recognized. The law also permits limited liability companies to become DAOs. The law has been described as a milestone moment that opens the door for American entities to organize themselves in a decentralized manner on the blockchain. 

Wyoming also has cheap and abundant energy sources, with favorable conditions for crypto mining operations. A ratified bill (HB 113) from 2019 allows electric companies to negotiate special utility agreements outside the standard rates. Under the law, big mining firms can also buy power plants and set up cryptocurrency mining operations.

Wyoming’s crypto-friendly legislation has made the state an attractive destination for U.S.-based cryptocurrency firms. Meanwhile, individual owners of crypto assets can gain the protection of Wyoming’s laws by moving to Wyoming or physically locating their cold storage assets somewhere in the state, or setting up their own Wyoming LLC, corporation, foundation, or other business entity. As crypto starts to see wider adoption across the world, Wyoming has a good shot at becoming one of the leading areas for the technology to flourish.

Share this article


Tagged : / / /

Favorable Regulation, Abundant Energy Turning Wyoming Into A Bitcoin Hub

Clear, welcoming regulation, abundant energy sources are among the main two reasons why Wyoming is becoming the next big Bitcoin state.

Friendly and precise regulation, abundant energy sources, and a thriving innovation landscape drive Wyoming to become the next bitcoin state. CNBC talked with Avanti CEO Caitlin Long and Sen. Cynthia Lummis, who both live there, to gauge what’s behind the state’s fast-tracking on Bitcoin innovation.

The state of Wyoming has been taking steps to become a hotbed for bitcoin companies by approving friendly legislations and clarifying existing ones. The state has already passed 26 blockchain-related bills, including a new type of charter for bitcoin banks – which have also been assured quick approval by the regulatory agencies there.

“What Wyoming did was create a welcoming legal environment, just clarifying that [the cryptocurrency] industry is lawful and does exist in a recognized manner,” said Avanti founder and CEO Caitlin Long. “In other states, [most of the industry] is just in a legal and regulatory grey area.”

Additionally, there is no personal income tax in Wyoming, which might have been driving people to look for a new place to call home to choose the state. When it comes to attracting companies, Wyoming also offers abundant, cheap energy sources – critical for bitcoin miners looking to relocate operations after mining-hotbed China started cracking down on the industry. Internet speeds and uptime are also great in Cheyenne, Wyoming’s capital, which has become a data center hub.

As a result, Sen. Cynthia Lummis told CNBC, the state is getting more revenue and creating more tech jobs. She hopes, however, that Wyoming’s example leads the federal government to take more significant steps.

“There’s been a long delay in getting [regulatory] action,” said Sen. Cynthia Lummis. “We’re trying to encourage the [federal government] to move it along so these companies are not burning through their capital trying to get a charter…they can actually begin to conduct business.”

Wyoming’s positive stance towards innovation is part of its history. The state has a record of pioneering new laws, having been the first U.S. state to allow women to vote and have Limited Liability Companies (LLCs). Hopefully, Wyoming’s lead in favorable regulatory action towards Bitcoin moves other states and the federal government to embrace the innovation.


Tagged : / / / / /

Wyoming’s crypto-friendly bill could be a sandbox in action, Sen. Lummis says

As the United States continues to weigh out the best ways to include crypto businesses through an infrastructure bill, the state of Wyoming has taken proactive measures to attract Bitcoin (BTC) miners and other crypto businesses to its local jurisdiction. 

Wyoming’s crypto-friendly notion comes into light as the state has passed more than 24 bills related to blockchain technology. A recent CNBC report shows that the state has now approved a bill that will allow for “quick approval for new crypto banks.”

Wall Street veteran Caitlin Long, the CEO of a digital asset bank Avanti, stated that Wyoming’s latest bill creates a welcoming legal environment. She added:

“[Wyoming’s bill] just clarified that this industry is lawful and does exist in a recognized manner.”

However, Long shared her concerns about the gray areas of crypto regulation in other states within the U.S. Comparatively, Wyoming has not imposed taxation on personal crypto incomes in addition to providing cheap energy resources and a fast internet connection, which is ideal for mining Bitcoin and other cryptocurrencies.

Wyoming’s Cynthia Lummis was among the U.S. senators who proposed crypto amendments to the infrastructure bill. CNBC quoted Senator Lummis saying:

“The state [of Wyoming] is bringing in more revenue and tech jobs thanks to crypto. It could be a sandbox in action for [Washington] DC.”

Citing long delays related to crypto reforms, Senator Lummis also highlighted the risk of crypto businesses “burning through the capital” to get a nod for starting operations. Following suit, other U.S. states, including Texas, Nebraska, North Dakota and Illinois, are now passing their own crypto-friendly bills.

The report also stated that leadership of crypto companies such as Kraken and Avanti believe that the developments led by Wyoming will further pressure other states and the Federal government to innovate along similar lines.

Currently, Texas and Wyoming lead the race to attract crypto banks and Bitcoin miners that have been recently banned from operating in China.

Related: White House supports only minor changes to crypto tax proposal

While the infrastructure bill, HR 3684, proposed a framework for crypto businesses to operate within the U.S, senators opposed imposing regulations around crypto taxes. If amended, the bill could allow many crypto-related businesses to bypass extensive reporting requirements.

On August 6, U.S. Treasury Secretary Janet Yellen objected to the infrastructure bill amendment proposal. Parallelly, the White House announced accepting the amendments suggested by Senators Rob Portman, Mark Warner and Kyrsten Sinema, excluding only proof-of-mining and sellers of hardware and software wallets from tax reporting.