Selecting a location for any startup company is a major step in setting up shop. States are selected on a wide range of criteria such as tax laws, overall quality of life for employees, or even—particularly for small businesses—the state in which their founders currently live. One state is proving especially friendly for those in the cryptocurrency field, however: Wyoming.
Wyoming’s draw as a friend to the crypto market began as a set of new laws took hold in the state. It started out as a state so unfriendly to cryptocurrency that residents couldn’t even hold a Coinbase account. After enacting 13 separate laws related to blockchain—and more are slated to follow—the least-populous state in the United States transformed into a much more blockchain-friendly environment.
Cryptocurrency’s comparative youth in the market means that regulators are having some difficulty coming to grips with how it should be handled. Federal regulations have been on the light side so far, so individual states are left picking up the slack. New York, for example, favors tighter regulation as seen in the Bitlicense concept. Bitlicense includes careful vetting for those who want to do business in the state. Wyoming, meanwhile, sees an opportunity herein to offer a friendlier climate, and it’s joined in this by neighbors Montana and Colorado.
In fact, some in Wyoming have interpreted cryptocurrency as a way to replace revenues lost in the coal industry, which had taken its own lumps in recent years. State Representative Tyler Lindholm and Caitlin Long, co-founder of the Wyoming Blockchain Coalition, have proven two good friends to the growing cryptocurrency movement in Wyoming.
The duo got together with lawyers from Ethereum application maker and promoter Consensys, and helped draft a series of bills designed to improve access to cryptocurrency in Wyoming. The bills included a measure to exempt digital tokens from Wyoming securities rules, and also exemption for cryptocurrency from the state’s property taxes as well.
Wyoming’s measures certainly helped, but recent federal regulation that suggested tokens created as a result of initial coin offerings (ICOs) were in fact securities subject to federal oversight left Wyoming in the lurch in terms of drawing ICO creators to the state. However, the measures did help Wyoming draw a range of new limited liability corporations (LLCs) to the state that focused on cryptocurrency.
Felix Shipkevich is a principal of Shipkevich PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
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