Shearman & Sterling | Fintech 2020 | Wyoming State Legislature Passes Several Measures to Foster Virtual Currency and Blockchain Innovation
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  • Wyoming State Legislature Passes Several Measures to Foster Virtual Currency and Blockchain Innovation
    The Wyoming state legislature recently passed the following virtual currency- and blockchain-focused bills intended to ease regulatory burdens at the state level for blockchain and digital asset ventures:
    • HB 0019 exempts virtual currency transactions within or outside the United States from money transmitter regulations under the Wyoming Money Transmitter Act.
    • HB 0070 states that any developer, seller or person who facilitates the exchange of an open blockchain token (often referred to as a “utility token”) is exempt from certain state securities registration and money transmission laws. These tokens must be exchangeable for goods and services and not marketed as an investment, and the developer or seller of the token may not enter into any repurchase agreement to locate a buyer for the tokens.
    • HB 0101 authorizes the use of blockchain technology to maintain corporate records. Corporations may use a shareholder’s private key on the blockchain to verify the shareholder’s identity and accept shareholder votes if the private key corresponds to the shareholder’s network address.
    • SF 0111 exempts virtual currencies from property taxation laws.
    • HB 0126 authorizes the establishment of “Series LLCs.” The Series LLC corporate structure, which allows for the unlimited segregation of members, managers, transferable interests and assets, is frequently used by blockchain ventures.
    These pieces of legislation set an interesting precedent for token regulation at the state level and establish Wyoming as one of the most virtual currency- and blockchain-friendly jurisdictions in the country. While it is encouraging to see state legislators take initiative on digital asset and blockchain regulation, it is important to remember that state-level legislative actions do not address or supersede the federal securities law requirements that may apply to token transactions.