Wyoming is poising itself to become the first American state to implement a clear banking authorization for digital assets, as legislators recently proposed a bill that would allow banks to offer custodial services for cryptocurrencies, in addition to outlining how such assets could potentially be classified by Wyoming courts.
Filed before the state government on Friday, the bill proposes that digital assets should be classified as property, based on existing laws. Authored by a bipartisan group of state legislators, the legislation aims to establish “an opt-in framework for banks to provide custodial services for digital asset property as directed custodians,” outline standards for such services, as well as delineate how digital assets would be legally defined.
As the Wyoming Blockchain Coalition co-founder Caitlin Long touted, the proposed law, if approved, marks a major milestone for the western U.S. state, and could offer multiple benefits for both crypto ventures as well as crypto users, noting that:
“A lot of companies are setting up as New York trust companies … the [Wyoming proposal] is a much better license than a New York Trust license because it’s [aimed at banks] and it’s in a state that has clarified the legal status of digital assets. Those two things are equally important. There isn’t another state that’s providing that clarity.”
Since its introduction, the bill has so far garnered notable support from Wyoming’s House and the Senate, including members from both Republican and Democratic parties, all of which co-sponsored the proposed legislation.
Among the bill’s sponsors include Senate president Drew Perkins (R.), Senate vice president Ogden Driskill (R.), as well as Senate minority leader Chris Rothfuss (D.). In addition, a number of house representatives have also expressed support for the proposed measure, including House Majority Whip Tyler Lindholm (R.), and Speaker of the House Steve Harshman (R.).
While the bill has so far gained momentum among the majority of state lawmakers, its introduction is only the initial step to its potential enactment.
As Long underscored:
“This [bill] was just released, it still has to go through everything. Anything can happen in a legislative process, it’s not done till the governor signs the bill, but it has a lot of momentum behind it and a lot of support.”
Long went on emphasizing that the massive support the bill has garnered so far was, in itself, a “labor of love,” adding that:
“It truly gives the blockchain industry something I think it needs, which is legal clarity to bring it to the next level, and even the bitcoin purists who would be opposed to intermediate [entities] being in [charge] would take comfort in knowing they now have legal status for their assets.”
Meanwhile, an alternative proposal had also been previously drafted which, according to Long, would have classified cryptocurrencies as securities, thereby requiring intermediaries to store crypto holders’ assets.
As Long explained further:
“We would have lost direct property rights of [those assets]. There was momentum building behind that proposal … and Wyoming went in a different direction that’s much better for cryptocurrencies.”
If enacted into law, the legislation is expected to take effect by July 1, 2019.