As currencies evolve with modern technology, Wyoming has emerged as a frontier for digital assets.
Wyoming’s rugged mountains and sprawling plains have long been considered the Last of the Old West. The state’s reputation is one proudly embraced—a badge of pride steeped in tradition. It is displayed in bold lettering on signs adorned atop weather-worn ranch gates: “This Is Cattle Country.”
That heritage lives on, and boldly so. But this pioneer country is fast evolving into a new kind of frontier, one that takes shape in cyberspace rather than wide open spaces. Driven by forward-leaning lawmaking, Wyoming has stepped to the vanguard of digital assets—modern currencies like Bitcoin that are creating new financial markets and rapidly changing how business is conducted.
Over the past three legislative sessions, the Wyoming Legislature passed 20 laws to better define digital assets. Policymakers have then wired those securities into existing commercial laws to provide protections to investors. As a result, the Cowboy State is the only state to offer a comprehensive legal framework and clarity around these exciting new financial instruments.
This year, state authorities are expected to establish a chancery court, which will be among the first nationally, to provide further legal precedent. Last month the Wyoming Banking Divisions issued the first charter for a crypto-bank, marking the country’s first approval of a new type of bank charter in more than 40 years.
A state known more for T-bones than technology may at first glance seem like an unlikely incubator for one of the world’s most innovative emerging markets. But Wyoming’s advantageous tax policies, which have long attracted discerning investors, make it a logical destination for cryptocurrency.
Wyoming tax codes are well known. Residents pay no state income or capital gains tax, no gift or estate tax, no tax on out-of-state retirement income, and no tax on mineral ownership or intangibles. It is not hard to see why Wyoming topped the Tax Foundation’s list of most tax-friendly states in the nation.
Less known are Wyoming’s strong privacy and creditor protection policies. Private trust records are not public, which means details regarding trust assets remain private. Records are automatically sealed in the event of judicial proceedings.
Wyoming is one only a few states that permits single family private family trust companies (PFTCs) to act as trustee for a trust or group of trusts. This structure creates privacy and facilitates family involvement in the decision-making process, allows for control over the investment asset mix, trustee succession and, importantly, is a tool by which the younger generation can be educated about valued family assets.
Those protections have created a groundwork ripe for cryptocurrencies. In 2017, Wyoming lawmakers crafted legislation that exempted certain digital tokens from security rules and excused digital assets from property tax requirements. Those policies have begun to draw an influx of capital and start-ups, and with them jobs and investment.
“The unique combination of these benefits created an environment that has allowed Wyoming to emerge as the country’s most digital asset-friendly economy and regulatory jurisdiction,” says Joel Revill, chief executive officer of Two Ocean Trust, a Wyoming based provider of wealth management services.
Whereas states like New York have sought to fence out cryptocurrencies, a form of blockchain, through regulation, Wyoming is leaning in. The state’s comprehensive legal framework, the only of its kind in the United States, permits firms based here to act as the custodian of record for investors. That establishes jurisdiction, which has begun to realize benefits for residents and state coffers alike.
“The unique combination of these benefits created an environment that has allowed Wyoming to emerge as the country’s most digital asset-friendly economy and regulatory jurisdiction.”
JOEL REVILLCHIEF EXECUTIVE OFFICER TWO OCEAN TRUST
The potential is immense. Nearly 70 percent of commercial banks are experimenting with blockchain—which could return as much as $12 billion in savings to financial institutions, according to experts. More than 14 countries are exploring the possibility of introducing official cryptocurrencies. Businesses spent $2.1 billion on blockchain solutions in 2018, and the market is expected to be worth $20 billion by 2024.
Wyoming legal framework has opened the doors to innovative applications of blockchain technology—which provides an “immutable” transaction leger valuable for ensuring supply chain integrity. Last year, the Wyoming Blockchain Task Force heard testimony about the application for land title transfers. The technology has been explored as a way to track food, including beef, from farm to consumer.
“The ethos of blockchain and the ethos of Wyoming are very similar,” Caitlin Long, cofounder of the Wyoming Blockchain Coalition, told Wired magazine in 2019.
Wyoming’s digital asset management companies, and cryptocurrencies at large, still face uncertainty of federal regulation, which are evolving alongside this new market. But Wyoming’s far-sighted vision has put it on the leading edge.
“It’s not every day that you get to be part of an exciting new asset class , and thanks to the work of our Governor, legislators and bank regulators, Wyoming is out in front of everyone with regards to this opportunity.”