Crypto Spokeswoman Caitlin Long: Wyoming’s New Blockchain Laws Breakdown in Plain English
Wyoming’s Newly Passed Laws Positions it as a Haven for Blockchain Firms
The state of Wyoming has taken the lead in proposing and passing comprehensive new blockchain favored laws designed to make it a haven for all blockchain tech firms and startups.
These 13 new laws, passed within a very short time frame is currently the most robust in the country. With these laws, Wyoming automatically becomes an incredibly friendly state for blockchain firms to set up shop.
This is probably why it’s now being referred to as the “Delaware of Digital Asset Law”; an allusion to the state of Delaware taking the lead in corporate law and virtual business incorporation.
With these new laws, Wyoming is most likely going to be a hotbed of blockchain innovation and creativity, eventually attracting more revenue, capital and jobs to the state.
Even better, it creates a slew of opportunities for blockchain startups and companies looking for a tax haven within the US as well as a favorable environment in which to set up, grow and thrive.
Also, in the wake of the state’s enactment of these laws, other states have jumped on the wagon, seeking to do the same, but on a smaller scale and at a slower rate –often only proposing and passing no more than a couple at a time.
This is probably why Wyoming will be the preferred location for many US based blockchain and crypto firms in the near future.
Wyoming’s pioneering edge in this space essentially gives it a head start in attracting blockchain companies very quickly. With that being said, let’s jump right into the meat of these newly passed laws so you can understand what they all mean.
How Do These Laws Benefit Blockchain Crypto Firms?
1) Digital Assets Categorized as Property
As a result, users have direct property rights to all digital assets, with the tokens and assets having the same negotiating power as fiat currencies. The state through these newly enacted commercial laws also protect digital assets by clearly recognizing them as directly owned peer to peer assets that could be exchanged as the transacting parties see fit.
2) Fintech Haven for Up to 36 Months
The laws automatically provides regulatory protections for blockchain and digital asset businesses looking to take advantage of these favorable laws. This means the state is essentially a fintech sandbox that shields these companies from restrictive or severe federal laws.
3) Aids the Set Up of Blockchain Friendly Banks
Right now, it’s hard to find banks willing to support blockchain both for depository and other financial services.
That’s why most take to private sales, ICOs and STOs to raise the funds they need for their projects, and then keep their funds in escrow accounts or convert them to cash and keep them in bank accounts unrelated to blockchain.
Wyoming’s new commercial laws allows for the establishment of a state-chartered depository institution that allows blockchain firms easily deposit their capital.
This bank which will become operational in March 2020, will have 100 percent reserves and primarily provide services to blockchain firms. This bank will also serve as a qualified custodian.
Of course, resident banks interested in offering this service can also use this law and broaden the scope of their services to include blockchain specific financial services, starting from the 1st of September, 2019.
The digital custodian bank will be unique in its services because it will recognize digital assets’ direct ownership status. As a result, investors will still own their assets, even if they’ll have to give up control temporarily.
Think of it as something similar to valet parking where you hand over your keys to someone to park your vehicle for a short while. This will product is bound to transform Wyoming into the choice destination for blockchain companies in the US and institutional investors looking to invest in those companies.
Which brings to some important questions. Let’s quickly examine these questions in the next section:
FAQs on Wyoming’s New Blockchain Laws
Do You Have to Reside in Wyoming to Become a Beneficiary?
Not at all. While you can move there like some companies have done in Malta, you don’t necessarily need to be situated in Wyoming to benefit from these laws. While you can research this on your own, we do suggest that you talk to a lawyer familiar with these new laws to get a better perspective.
How Can All Entities Enjoy These Benefits?
Whether you’re an individual or an organization, the good news is that all digital asset owners can become protected by the new laws. They can do this by either relocating to the state or storing their cold storage device containing their tokens in the state.
Another option is to set up a foundation, trust, corporation, or an LLC in the state, essentially domiciling in the state through this process. This way, there’s a business presence of sorts there. This is similar to business entities and individuals setting up corporations in tax havens.
The LLC is always a great option if you’re looking for a solid way to enjoy the benefits of the new laws and pay less taxes on your digital assets –Wyoming is currently the tax-friendliest state in the country.
If you’re worried about the absence of special courts dedicated to the resolution of difficult and intricate business cases like Delaware does, the state’s new Chancery Court is the answer. The state just recently set that up for that sole purpose.
Speaking of Taxes, What Can You Expect?
As earlier mentioned, Wyoming is the most tax friendly state in the country, often requiring no state taxes like corporate or personal income taxes, and other hidden taxes that other states tend to slap businesses with. In fact, there are zero taxes on digital assets, thanks to a new law that classifies them as intangible personal properties.
Federal taxes however, are necessary and in compliance with the IRS’ categorization of digital assets. The good news is that there are 25 opportunity zones in the state where if you stay there, chances are that you can easily enjoy a capital gains deferral.
This means that having your cold storage device kept in one or more of these places, will translate to an even more profitable venture for your business and investment. With the capital gains deferral, you can easily parlay all your profits back into your business, further improving your chances of enjoying accelerated growth.
With Wyoming considered the tax friendliest state in the country, it’s no wonder that many companies are moving their headquarters or base of operations to the state. And this also applies to digital assets.