New Registry Will Let Crypto Enthusiasts Put Their Bitcoin and Non-fungible Tokens in Wyoming
Secretary of State seeking input on rules for digital asset registrations
- Published In: Politics
- Last Updated: Aug 03, 2023
Cryptocurrencies like bitcoin exist only in the digital realm, which has created tricky legal questions about jurisdiction. Wyoming is launching a new registry that will allow owners to officially put their digital assets in the state. (Courtesy photo from Jievani Weerasinghe via Unsplash)
By CJ Baker
Special to the Wyoming Truth
With bitcoin, non-fungible tokens and other digital assets lacking a physical form, a common question is, where, exactly, are they? State leaders are offering a potential answer: in Wyoming.
Last winter, the state legislature approved a new registry that will give digital asset owners the ability to declare that their cryptocurrencies or other tokens are located in Wyoming. Doing so would give owners the clarity and benefits of the state’s crypto-friendly laws, which could help in a legal dispute or even for tax purposes.
The registry is set to go live by Dec. 1, and the Wyoming Secretary of State’s Office unveiled proposed rules for the program last week. Public comments are being sought through Sept. 13.
Although the legislation cleared the state Senate and House by wide margins — 28-1 and 43-14, respectively — it still faced a number of questions. Some are related to the ethereal nature of digital assets, which only exist on digital ledgers known as blockchains. During one January hearing, proponent Sen. Chris Rothfuss (D-Laramie) apologized for the “blockchain techie stuff,” after noticing “doubt, uncertainty and bewilderment” on the face of a fellow senator.
“It is all cutting edge; it’s all very complicated and new,” Rothfuss added later, “and that’s the reason why there’s a lot of opportunity for us …”
Even for those familiar with digital assets, there remains an exceptional amount of legal uncertainty for the asset class. For instance, Rothfuss said there are questions about who owns non-fungible tokens (NFTs) or AI-produced artwork and how disputes over those assets would be handled in court.
“That clarity doesn’t exist in other states,” Rothfuss said. “It does exist in Wyoming.”
How many people or entities will take advantage of the state’s new registry — and pay the $500 fee — is another open question. Secretary of State Chuck Gray has been skeptical there will be enough use to cover an estimated $270,000 startup cost. During the session, he said recent launches of two new types of business entities — decentralized autonomous organizations (DAOs) and series limited liability companies — haven’t drawn the interest supporters had hoped.
“I certainly understand the argument that once all these pieces are in place, then it’s going to be a bonanza,” Gray told the Senate corporations committee in January. “But … each time there is a certain argument that this next thing is going to be a bonanza.”
Rothfuss countered that there’s “a lot” of interest in registration, “and there are billions and billions of dollars of digital assets out there that don’t have a lot of legal standing.”
One caveat is that only Wyoming residents and Wyoming-incorporated business entities can apply. On blockchains where assets can be irrevocably and anonymously transferred anywhere at any time, the ties to an owner or registered agent in Wyoming are intended as a safeguard against bad actors.
Rep. Jared Olsen (R-Cheyenne) added that the ultimate aim of the blockchain push is to bring more people and businesses to Wyoming. The Legislature’s blockchain committee, which Olsen co-chairs, has recently been “a lot more aggressive on saying, ‘No, we want you here,’” he said at a February House corporations hearing.
Personally, however, Olsen supported opening the registry to residents and businesses outside the state. He suggested there was little potential for abuse.
In the case of an NFT, “we’re talking [for example] about the gif image of a basketball player dunking a ball,” Olsen said. “So I don’t know what nefariously could occur in registering an asset.”
The House removed the requirement that the entity or person be in Wyoming, but it was reinstated after pushback from senators and Gray.
In addition to paying the $500 fee, applicants must provide their name, address, information about their digital asset and proof they own it. The rules proposed by the Secretary of State’s Office spell out the details of that process. For instance, owners will need to use the asset (or the digital wallet/address holding it) to provide a cryptographic signature that incorporates unique information from the secretary’s office.
Registrations will last five years by default and can be renewed for $250.
Although Gray estimated it would cost roughly $266,500 to implement Senate File 76, the Legislature provided $170,000. It will take 340 registrations to recoup that cost.
As of Tuesday, the office was still awaiting its first comment.