A short while ago, the state of Wyoming had some of the strictest money-transmitter laws. The laws were so restrictive that residents of the state could not even create a Coinbase account. However, the state has changed course since then. It created 13 laws for the crypto sector, with other proposals pending.
Greatly Fragmented Regulatory Environment
These laws by the state of Wyoming are part of the patchwork of laws that govern the crypto sector in the US. At the Federal level, various regulatory bodies have come up with their own rules. In some states like New York, the law is quite restrictive. In a few states, there is no law governing crypto.
The impact of the Law
The states of Wyoming’s blockchain laws are quite comprehensive. For instance, they recognize property rights for those who hold digital assets. To do this, the rules apply the same rules as those that apply to fiat.
Besides that, the law called for the creation of a sandbox to offer regulatory relief to innovators who wish to delve into the blockchain industry. Those who use the regulatory sandbox will be immune to state laws for 3 years. This is in line with other sandboxes in the US and elsewhere in the world.
The law also called for the creation of a depository institution that will offer banking services to business in the blockchain sector. The institution will not be allowed to lend, however. It will only act as a business depository and must maintain 100% reserves at all time. There is also the option for FDIC insurance. Such banks could be operational as soon as 2020.
In Wyoming, banks could start operating with digital assets as soon as 2019. This will be important since banks will recognize the direct ownership of crypto coins. In most other states, institutional investors as the de factor creditor of the securities custodians. This is because, in other states, publicly-traded securities are not owned directly.
With the creation of these laws, Wyoming is essentially transforming itself into a crypto haven in the US. Ultimately, capital tends to follow the path of least resistance. This could lead to an upsurge in individual and institutional investors moving to the state.
To take advantage of these laws, you do not even need to move to the state. This will only apply if you plan to start a bank in the state. For most other investors, you only need to seek legal advice to get started.
To take advantage of the laws, you can set up an LLC in the state or move your cold storage to the state. Additionally, you could move to the state if you were already thinking of moving there. If you are a major investor in crypto and blockchain, Wyoming your assets via an entity located in the state is unbeatable. This is especially so from a property planning perspective. The state is often cited as the most tax-friendly state in the state and has some of the best privacy protection laws.
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