New Wyoming Law Provides an Open Blockchain Token (Cryptocurrency) Exemption from Specified Securities and Money Transmission Laws

 

Wyoming adopts House Bill No. HB0070 providing that a person who develops, sells or facilitates the exchange of an open blockchain token (such as certain cryptocurrency) is not subject to specified securities and money transmission laws in Wyoming. https://legisweb.state.wy.us/2018/Introduced/HB0070.pdf

The new law, effective as of July 1, 2018, provides that the developer or seller of an open blockchain token shall not be subject to certain securities and money transmission laws in Wyoming, if all of the following are met:

(i) The token has not been marketed by the developer or seller as an investment;

(ii) The token is exchangeable for goods or services; and

(iii) The developer or seller of the token has not entered into a repurchase agreement of any kind or entered into an agreement to locate a buyer for the token.

 

Further, a person who facilitates the exchange of an open blockchain token shall not be deemed a broker-dealer or a person who otherwise deals in securities under Wyoming Law and shall not be subject to the provisions of W.S. 17-4-301 through 17-4-510 if all of the following are met:

(i) The person has a reasonable and good faith belief that a token subject to exchange:

(A) Conforms to the requirements of paragraphs (a)(i) and (ii) of W.S. Section 17-4-206; and

(B) Is not the subject of a repurchase agreement of any kind or the subject of an agreement to locate a buyer for the token.

(ii) The person takes reasonably prompt action to terminate the exchange of a token that does not conform to the requirements of this W.S. Section 17-4-206.

(c) As used in this W.S. Section 17-4-206, “open blockchain token” means a digital unit which is:

(i) Created:

(A) In response to the verification or collection of a specified number of transactions relating to a digital ledger or database;

(B) Based on random selection or the possession or age of existing units; or

(C) Using any combination of the methods specified in subparagraphs (A) and (B) of this paragraph.

(ii) Recorded in a digital ledger or database which is chronological, consensus-based, decentralized and mathematically verified in nature, especially relating to the supply of units and their distribution; and

(iii) Capable of being traded or transferred between persons without an intermediary or custodian of value.

 

Wyoming Statute Section 17-4-102 was amended to exclude a person who facilitates the exchange of an open blockchain token under Section 17-4-206(c) from the definition of a “Broker-dealer.” A Broker-dealer otherwise generally means a person engaged in the business of effecting transactions in securities for 2the account of others or for the person’s own account.

Wyoming Statute Section 17-4-102 was amended to exclude the open blockchain token from the definition of a “security.”

Wyoming Statute Section 40-22-104 was amended to exempt a person who develops, sells or facilitates the exchange of an open blockchain token, as defined in 9 W.S. 17-4-206(c), from the Wyoming Money Transmitters Act, Wyoming Statute 40-22-101, et seq.

 

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