Wyoming is Challenging the Fed, Can it Become America's "Crypto Valley"?
The DC Swamp continues to fester, but there is still interesting work being done at the State level. Particularly interesting is what we've seen so far this year in Wyoming.
Earlier this month, the Wyoming legislature became the latest state to modify their state laws to challenge the Federal Reserve's monopoly on money.
Titled the Wyoming Legal Tender Act, the new law defines gold and silver specie as “legal tender,” meaning it will be recognized as a medium of exchange for the payment of debts and taxes in the state. Practically speaking, gold and silver specie will be treated as money, putting it on par with Federal Reserve notes in Wyoming.
The law defines specie as coins having gold or silver content, or refined bullion, coined, stamped or imprinted with its weight and purity.
HB103 also prohibits the state or local governments from levying any property, sales of capital gains taxes on gold or silver specie. Wyoming does not have an income tax. However, it does have a sales tax and it assesses this tax against precious metals bullion
The Senate passed HB103 with some technical amendments by a 25-5 vote. The House previously passed HB103 by a 44-14 vote. Last Wednesday, the bill became law without Gov. Matt Mead’s signature. It will go into effect July 1, 2018.
At the same time, Wyoming became the first state in the nation to explicitly recognize cryptocurrency as a new asset class.
The Utility Token bill was designed to exempt specific cryptocurrencies from state money transmission laws and is the first of its kind to legally define the way in which specific types of crypto tokens are treated by regulatory bodies. The bill excludes “developers or sellers” of tokens from securities laws under the caveat that they meet certain conditions. In order to meet these requirements, the token must not be offered as an investment and must be a vehicle for exchange as a utility token.
The state of Wyoming is the first elected body in the world to define a utility token as a new type of asset class different from a security or commodity,” Caitlin Long, co-founder of the Wyoming Blockchain Coalition, told me. “This has been a hot topic in Washington D.C. recently, as the SEC considers cryptocurrencies to be securities, FinCEN says they’re generally money, and the CFTC views them as commodities. Now, however, you have a state coming out and defining utility tokens as a new form of property, and property is generally the purview of state law.
Long and the other members of the Wyoming Blockchain Coalition view the passing of House Bill 70 to be especially groundbreaking as this could be the first step to getting the U.S. congress to clarify how cryptocurrencies should be regulated.
This could be very positive for the cryptocurrency community if Congress can break the tie and clarify everything. It’s very exciting that Wyoming is the first state to define what a utility token is, setting an example of how this could become a standard under federal law. I do believe the Wyoming approach will work under federal securities law and am optimistic the SEC will agree, Long said.
Already the Cowboy State is seeing a payoff for their proactive approach to cryptocurrency. According to Long on her personal blog, "Dozens of small software companies have already formed Wyoming entities and some of these have already leased office space – 20,000 square feet and counting."
We are honored to have her as a supporter, and very excited that she will be speaking at our San Francisco event on The Future of Money in May.