Motto for the University of Wyoming. Photo by Caitlin Long
Here’s a halftime recap for the Wyoming Blockchain Coalition’s 2019 legislative efforts.
Eight bills that are enabling to blockchain technology have already passed in their originating chamber (House or Senate) and will cross over to the other chamber (Senate or House) this week, to begin the process all over again. If the bills pass in the second chamber, they could reach Governor Gordon’s desk as early as mid-February.
The best news for Wyoming? Major companies are starting to book trips to visit Wyoming. The big players are showing particular interest in two bills that pertain to financial services, SF 125 and HB 74. Those two bills would solve real problems facing the blockchain sector and would bring jobs and revenue to Wyoming—and they’re shaping up to be potentially quite significant. One legislator referred to SF 125 as “the biggest bill in the legislature in the last decade.”
Here’s a summary of the 8 bills that remain active, listed by order of bill number. Bill numbers starting with an H or S originated (and already passed) in the House or Senate, respectively, and will be considered by the other chamber beginning this week.
- HB 57, Fintech Sandbox: would authorize the Secretary of State or the Banking Commissioner, upon approval of an application and the posting of a consumer protection bond, to waive applicable statutory or rule provisions that would otherwise prevent the product or services from being offered to consumers.
- HB 62, Wyoming Utility Token Act: would amend and expand the utility token provisions enacted by HB 70 in 2018 and move them to a newly-created chapter of Wyoming’s statutes. The language would no longer be constructed as an exemption from Wyoming’s securities statutes, and would instead provide for a new, separate chapter under Wyoming’s statutes that classifies utility tokens as intangible personal property and specifies the treatment of utility tokens under existing laws.
- HB 70, Commercial Filing System: would authorize the Secretary of State to develop and implement a blockchain-based commercial filing system for the submission of business entity registrations and reports, Uniform Commercial Code financing statements and other similar filings.
- HB 74, Special Purpose Depository Institutions: would create special purpose depository institutions to serve businesses which may not be able to access traditional banking services, including blockchain businesses. The bill contains findings related to blockchain businesses and other entities being unable to secure FDIC insured banking services because of their dealings, or perceived dealings, with virtual currencies or other digital assets. The bill provides that a special purpose depository institution would be prohibited from making loans, would be required to maintain 100% of its deposits in reserve, would provide services only to businesses, and must comply with all applicable federal laws.
- HB 113, Special Electric Utility Agreements: would enable Wyoming’s electric utilities to enter into service agreements with cryptocurrency miners that are segregated from all other customers of the utility, so that all costs and benefits (direct or indirect) from such agreements would accrue solely to the shareholders of the utility. The utility’s other customers would be fully insulated from any losses or costs arising from such agreements.
- HB 185, Corporate Stock Certificate Tokens: would enable Wyoming corporations to issue certificate tokens on a blockchain in lieu of stock certificates. The bill would add to provisions enacted in last year’s HB 101, which enabled corporations to issue uncertificated blockchain shares, by enabling corporations to choose between issuing either certificated or uncertificated blockchain shares.
- SF 28, Banking Technology and Stock Revisions: would make clarifications to existing bank recordkeeping statutes to authorize the use of electronic records, including by allowing banks to identify stockholders using a data address. The bill would also authorize banks to issue any form of stock authorized for other corporations.
- SF 125, Digital Assets-Existing Law: would classify digital assets by type (virtual currencies, digital securities and digital consumer tokens), would specify the treatment of each type of digital asset under existing commercial laws, and would define a method for perfecting security interests in digital assets. The bill also provides an opt-in regime for Wyoming banks to become Qualified Custodians of digital assets pursuant to the SEC’s Custody Rule, acting as a directed trustee, and specifies investor protections that opting-in banks must meet.
Two other important bills also moving through the legislature would further benefit blockchain companies, even though their reach is much broader than blockchain. SF 159 would provide a process for Wyoming’s electric utilities to sell the coal-fired generation plants they would otherwise be permanently shutting down. This bill aims to keep the plants open, thereby supporting one of Wyoming’s biggest industries (coal). Cryptocurrency miners could be among many potential bidders for the plants, which would likely offer such miners power costs that are competitive with alternatives currently available to them from other sources around the world.
And, wrapping it all up in a bow, SF 104 would create a new Wyoming court that specializes in business disputes (a chancery court). Similar to that of Delaware and a handful of other states, the chancery court would enable businesses to avoid a jury trial and to have their cases heard in front of an experienced judge. I see this as the final missing piece for Wyoming, which invented the LLC in 1977 and ranks third in new business formations—but some businesses have avoided domiciling in Wyoming due to the lack of a business court.
Much work is left to be done before these bills become law, but we have good momentum. I’ll post a recap once the outcome is final!