At a time when crypto assets are increasingly being asphyxiated in the markets of Asia ( looking at you China and India) , the American state of Wyoming has taken a rather friendly stance.
They have passed four new bills, which are expected to be signed into law by the states governor soon. This places it in the category of being the most friendly location to conduct crypto related business in the US.
This sort of positivity stems from the fact that the legislators have not shied away from addressing the difficult questions. There are a number of issues that might seem simple but have legal ramifications. While the complex web of legal jargon might be hard to navigate past, the state has at least confidentially set sail.
Whose Crypto is it anyway?
A major bone of contention is in relation to the ownership of crypto assets. As there is hardly any legal precedent, no one is sure as to how the courts will address any disputes stemming from the question of crypto asset ownership. As the adjunct professor at NYU Law, Drew Hinkes, points out:
“There’s this predicate assumption that when someone has a private key associated with a wallet that controls some crypto asset, that you own it.”
Yet there is no legal definition to support this assumption and this is where things get messy.
This means, as things stand, every business engaged in crypto exchanging or lending are legally exposed, even in their simple daily operations. And according to Hinkes, the issue is not helped at the federal level either, as each agency has a vested interest in defining what a crypto is, in their own way.
A better way ahead
Thus, the states concerted effort holds great significance. What’s more is that Wyoming has clearly subdivided the blockchain-based assets in to three kinds of property assets:
- A digital security : these are the investment contracts
- A digital consumer asset: these are the utility tokens
- Virtual currencies: These are bitcoins and all other alt coins
This effort was widely celebrated by the community, as having this in black and white undoes needless complications. As Guillermo Jimenez, from decryptmedia, wrote
“It[lack of clarity] complicates the ability to take or give security interest, and the ability to establish derivative products based on crypto.”
The same article from Decrypt went on to discuss the advantages the states legal framework offers the community.
Issues of delegation of a tokens authority or fully collateralised lending have been looked at and addressed. This also links to issues of taxation of the asset and as the article put it
“how ownership is ultimately defined for these assets will determine how they are regulated.”
By taking these brave new steps, the ranchy and rocky state has invited those interested in digital assets to look westwards. Along with that, for crypto assets ” to be fully financialized and commercialized” having clear property rights is imperative.
The state of Wyoming seems to understand this better than most countries. One hopes that this sort of regulatory behaviour is looked at and adopted by more places, for the mutual benefit of the state and the crypto community.