Wyoming is famous for its national parks, like Yellowstone and the Grand Tetons, but it may soon be known as a place to fund and grow a blockchain startup.
According to Republican state Rep. Tyler Lindholm, there are four bills to be introduced mid-February when the Wyoming Legislature goes into session that will impact the state’s growing tech sector. One, Lindholm believes, should excite the blockchain community.
This legislation, House Bill 0070
, “exempts initial coin offering [ICO] tokens issued on an open blockchain from Wyoming’s money transmitter and securities laws, as long as the token has not been marketed as an investment and is exchangeable for goods or services,” he said. This bill would also exempt token exchanges from being deemed broker/dealers under Wyoming law.
Startups issue ICOs to fund their companies by selling company tokens for cryptocurrencies like bitcoin and ethereum. Sometimes these are treated as shares in the company, and may be subject to taxation by the U.S. Securities Exchange Commission (SEC). At other times startups issue what are called utility tokens, which give the bearer the right to software the company produces or a service the company will provide. The Wyoming legislation would classify utility tokens as a non-security investment, which could be looked at by the blockchain community as a hedge against SEC taxation.
According to Lindholm, the magic of this bill has already worked for the state. In January, a small Canadian company, BlockCrushr Labs, opened a corporate subsidiary in Cheyenne to take advantage of the enhanced technology environment. The company offers a product called TokenClub, a monthly ICO subscription service, and last year won an award at the UAE Blockchain Virtual GovHack competition for a proposed product called Hypergive, a system that enables crowdfunding of secure digital food wallets for homeless and hungry people.
According to BlockCrushr CEO Scott Burke, the company decided to open a BlockCrushr office in the state because of its progressive approach to blockchain and cryptocurrencies.
“Wyoming is one of the best places in the U.S. to do business,” Burke said. “Between low startup costs, the most business-friendly tax system in the country and lawmakers who are focused on supporting and fostering the growth of innovative fintech business and technology, Wyoming just makes sense.”
Lindholm hopes that other companies like BlockCrushr will relocate to Cheyenne because of these bills. “We are trying to figure out how we can keep our kids in the state,” he said. “We need to make it appealing to stay,” he said, noting that innovative companies that are bent on developing cutting-edge technologies could be the ticket. In a state with a small population of just over half a million, adding even 100 jobs from those companies could make a big difference.
The second bill, House Bill 0101
, sponsored by Rep. Jared Olsen, R-District 11, would enhance the ability of autonomous vehicle and Internet of Things (IoT) companies to easily file LLCs.
“Filing an LLC can be a burdensome process,” said Lindholm, and this bill would streamline it.
He describes the other two bills as “cleaning up statutory language to utilize new technology.” According to Lindholm, House Bill 0019
would exempt virtual currencies from Wyoming’s money transmitter laws. The antiquated law requires money transmitters to hold 25 percent of the value of the tender to be transmitted.
In 2015, this bill became an issue when San Francisco-based Coinbase pulled out of Wyoming because of it, leaving the state without access to kiosks with which to purchase cryptocurrencies. When bitcoin began to rise in value last year, Lindholm’s constituents complained, but he said this bill should rectify the problem.
The final bill, which has yet to be introduced and given a number, allows the state to store company ownership and ownership changes on blockchain. It is also Lindholm’s hope that official records, like deeds, titles and receipts for the state, would be stored on blockchain.
Behind all these legislative efforts is a savvy group of business, political and academic leaders calling itself the Wyoming Blockchain Coalition
. Not only has the organization helped legislators improve statutes to enhance the business environment for startups in Wyoming, but it is also made up of many of the state’s politicians and prominent business leaders. The group includes former Wyoming Gov. Jim Geringer; current Cheyenne Mayor Marian Orr; Overstock.com CEO Patrick Byrne; and Caitlin Long, chairman and president of Symbiont, an enterprise blockchain company; among others.
At least 11 states introduced laws
in January to regulate cryptocurrencies and blockchain.