In an attempt to become the Cryptocurrency Capital of the United States, Wyoming has passed state laws to attract blockchain startups, in stark contrast to the anti-cryptocurrency laws in states such as New York, where BitLicense has resulted in a mass exodus of blockchain companies from the state.
In New York, strict licensing requirements have resulted in most blockchain companies leaving, where only well-funded companies like the Gemini bitcoin exchange are able to afford the legal costs associated with approval. So, what is Wyoming doing differently?
The Republican Governor of Wyoming, Matt Mead, signed major legislation into law that makes LLC laws friendlier to blockchain companies. This includes exemption of cryptocurrency from state property taxes, and categorizing utility tokens as an asset class. David Pope, an accountant and Executive Director of the Wyoming Blockchain Coalition said, “The more traction and the more ground we can gain toward Delaware, the better for the state of Wyoming.”
Delaware is known for being arguably the most business-friendly state in the union. Courts handle corporate law cases on a regular basis, meaning that results are generally consistent and predictable, compared to other states where results are more dependent on the judge’s personal biases. Wyoming has long been considered a state where freedom may thrive, and this new legislation is an example of that. Consider that Wyoming is 1,000 miles from Silicon Valley. Until now, Silicon Valley has been a technology hub, where the best and the brightest have moved their start-ups. However, California taxes are among the highest in the nation. With tax relief in Wyoming, and a blockchain-positive message, it’s very possible that some start-ups will relocate to the state. According to Pope, the Wyoming Blockchain Coalition has already been contacted by over a dozen companies inquiring into registration in the state of Wyoming.
In 1977, Wyoming was the first state to allow for LLCs. Despite being first-to-market, Delaware surpassed them in corporate registrations. The state now has an opportunity for a do-over. With enough effort, they may attract domestic companies, leaving federal law as the primary barrier to entry. With potential regulations on the horizon from the CFTC, SEC, IRS and other government organizations, blockchain companies are choosing to set up shop outside of the United States, in places like Singapore, Malta and even Bermuda.
State Representative Tyler Lindholm, a Republican who sponsored major parts of the new legislation stated that Wyoming generates $30 million in revenues from corporate registration and filing fees. By comparison, Delaware generates over $1.2 billion. If Wyoming is able to attract a majority of blockchain companies that are interested in this sort of tax relief and a crypto-friendly environment, then it’s very possible that Wyoming will catch up to their East Coast competitor.
There have been concerns expressed about whether the legislation would conflict with SEC guidelines. According to Lindholm, “I don’t think Wyoming is going to get in a fight with the SEC.” In other words, the new legislation should provide relief on a local level, but likely will not attempt to take precedence over federal guidelines.
Presently, several crypto-related companies are registering in Wyoming on a daily basis. These include crypto-mining operations that bring additional revenues to the state in their energy usage. Additionally, if Wyoming’s friendly environment is able to sway ICOs that are looking to register outside of the US to instead keep their operations in the country, then it will mean more dollars going to the US economy, rather than abroad.