Wyoming has established a pioneering role in blockchain and cryptocurrency regulation, creating a legal framework that’s favorable for crypto businesses and decentralized autonomous organizations (DAOs). The state’s key legislation includes:
- HB 19: Exempts cryptocurrency from the Wyoming Money Transmitter Act, reducing regulatory hurdles for crypto exchanges and wallet services.
- HB 70: Exempts utility tokens from securities regulations, acknowledging their unique nature in the digital economy.
- HB 101: Authorizes the use of blockchain technology in business, paving the way for innovative applications.
- HB 126: Creates “series LLCs” for blockchain and cryptocurrency businesses, enhancing legal structures to support these entities.
- SF 111: Exempts virtual currency from property taxation, making Wyoming an attractive location for crypto investments.
Wyoming, a state known for its rugged individualism and pioneering spirit, has positioned itself at the forefront of blockchain and cryptocurrency innovation. The state has enacted a series of laws aimed at facilitating the growth of crypto businesses, alongside establishing a legal framework for decentralized autonomous organizations (DAOs). While there have not been any specific cases addressing Wyoming LLC crypto laws, understanding the existing legislation and general LLC law cases provides valuable insight into the state’s legal landscape for cryptocurrencies and blockchain technology. For a primer on Wyoming Crypto Laws that provides an overview of the recent legislation. This article is intended to provide an brief overview of Wyoming Laws that may apply to crypto LLCs; in addition, it may be helpful to look at the Algorithmically Managed Wyoming LLC Operating Agreement, which we have open sourced for general use.
The Wyoming Blockchain Legislation, enacted in 2018, is a key set of laws that apply to LLCs involved in the cryptocurrency sector. HB 19 exempts cryptocurrency from the Wyoming Money Transmitter Act, while HB 70 exempts “utility tokens” from state securities and money transmission laws. HB 101, the “Blockchain Fillings Bill,” updates the Wyoming Business Corporations Act to authorize the use of blockchain technology for various purposes. HB 126 creates a new corporation type called “series LLCs” to better facilitate the development of blockchain and cryptocurrency businesses, and HB 189 exempts virtual currencies from property taxation. The Decentralized Autonomous Organization Supplement, enacted in 2021, is another key law that applies to LLCs involved in the cryptocurrency sector. It allows DAOs to incorporate as limited liability companies, and sets out the process for electing decentralized autonomous organization status. The Wyoming Limited Liability Company Act applies to DAOs unless there is a conflict with other provisions in the supplement. The relevant statutes and regulations are below for convenience:
Section 17-31-104 – Definition and election of decentralized autonomous organization status, Wyo. Stat. § 17-31-104
This statute is relevant to the research request because it defines and sets out the process for electing decentralized autonomous organization status, which is a type of LLC that may be involved in the cryptocurrency sector. However, the research request specifically asks for “key laws” and it is not clear from the excerpt whether this statute is considered key.
“(a) A decentralized autonomous organization is a limited liability company whose articles of organization contain a statement that the company is a decentralized autonomous organization as described in subsection (c) of this section. (b) A limited liability company formed under the Wyoming Limited Liability Company Act, W.S. 17-29-101 through 17-291102, may convert to a decentralized autonomous organization by amending its articles of organization to include the statement required by subsections (a) and (c) of this section and W.S. 1731-106. (c) A statement in substantially the following form shall appear conspicuously in the articles of organization or operating agreement, if applicable, in a decentralized autonomous organization: NOTICE OF RESTRICTIONS ON DUTIES AND TRANSFERS The rights of members in a decentralized autonomous organization may differ materially from the rights of members in other limited liability companies.
“The registered name for a decentralized autonomous organization shall include wording or abbreviation to denote its status as a decentralized autonomous organization, specifically “DAO”, “LAO”, or “DAO LLC.” (e) A statement in the articles of organization shall establish how the decentralized autonomous organization shall be managed by the members, including to what extent the management will be conducted algorithmically.”
This statute is relevant to the research request because it clarifies that the Wyoming Limited Liability Company Act applies to decentralized autonomous organizations (which may include LLCs involved in the cryptocurrency sector) unless there is a conflict with other provisions. However, the statute does not specifically mention cryptocurrency, so additional research is needed to confirm its applicability.
“(a) The Wyoming Limited Liability Company Act applies to decentralized autonomous organizations to the extent not inconsistent with the provisions of this chapter, and the powers provided to the secretary of state by W.S. 17-29-1102 shall apply to this chapter. (b) This chapter does not repeal or modify any statute or rule of law that applies to a limited liability company that is organized under the Wyoming Limited Liability Company Act that does not elect to become a decentralized autonomous organization.”
(a) To become a registered limited liability partnership, a partnership shall file with the office of the secretary of state a statement of registration as a registered limited liability partnership. The statement of registration shall state: (i)”
“A brief statement of the business in which the partnership engages; (v) Any other matters that the partnership determines to include; and (vi)”
“A partnership becomes a registered limited liability partnership at the time of the filing of the initial statement of registration with the office of the secretary of state or at any later date or time specified in the statement of registration if, in either case, there has been substantial compliance with the requirements of this chapter.”
“The fact that a statement of registration or a statement of renewal is on file with the office of the secretary of state is notice that the partnership is a registered limited liability partnership and is notice of all other facts set forth in the statement of registration or statement of renewal. (m)”
Section 17-21-1104 – Applicability of act to foreign and interstate commerce, Wyo. Stat. § 17-21-1104
“(a) A partnership, including a registered limited liability partnership, formed pursuant to an agreement governed by this chapter, may conduct its business, carry on its operations and have and exercise the powers granted by this chapter in any state, territory, district or possession of the United States or in any foreign country. (b) It is the intent of the legislature that the legal existence of registered limited liability partnerships formed pursuant to an agreement governed by this chapter be recognized outside the boundaries of this state and that the laws of this state governing such registered limited liability partnerships transacting business outside this state be granted the protection of full faith and credit under the constitution of the United States. (c) Notwithstanding W.S. 17-21-106, the internal affairs of registered limited liability partnerships, including the liability of partners for debts, obligations and liabilities of or chargeable to the partnership or another partner or partners and the liability of partners to the partnership and other partners, shall be subject to and governed by the laws of this state. (d) Before transacting business in this state, a foreign registered limited liability partnership shall: (i) Comply with any statutory or administrative registration or filing requirements governing the specific type of business in which the partnership is engaged; and (ii) File a statement of registration as a foreign registered limited liability partnership with the office of the secretary of state, on such forms as the secretary shall provide, stating: (A)”
“An email address and the address of its principal office which, if in this state, shall be its registered office for service of process; (D) If the partnership’s principal office is not located in this state, the address of a registered office and the name and address of a registered agent for service of process in this state, which the partnership will be required to maintain; (E) A brief statement of the business in which the partnership engages; (F) Any other information that the partnership determines to include; and (G)”
“A foreign registered limited liability partnership whose registration has lapsed for failure to pay fees or failure to maintain a registered agent in this state as provided in this article may apply to the secretary of state for reinstatement within two (2) years after the effective date of lapse as provided in W.S. 17-21-1107.”
Section 17-29-104 – Nature, purpose and duration of limited liability company, Wyo. Stat. § 17-29-104
“(a) A limited liability company is an entity distinct from its members. (b) A limited liability company may have any lawful purpose, regardless of whether for profit. (c)”
“No limited liability company may offer professional services or practice a profession except by and through its licensed members or licensed employees, each of whom shall retain his professional license in good standing and shall remain as fully liable and responsible for his professional activities, and subject to all rules, regulations, standards and requirements pertaining thereto, as though practicing individually rather than in a limited liability company.”
“(a) The Wyoming Limited Liability Company Act applies to close limited liability companies to the extent not inconsistent with the provisions of this chapter and the powers provided the secretary of state by W.S. 17-29-1102 shall apply to this supplement. (b) This chapter does not repeal or modify any statute or rule of law that is or would apply to a limited liability company that is organized under the Wyoming Limited Liability Company Act that does not elect to become a close limited liability company. W.S. 17-25-102”
Section 17-29-114 – Foreign limited liability companies; operation; revocation and reinstatement of certificates of authority, Wyo. Stat. § 17-29-114
“To the extent not inconsistent with this act or the provisions of the Wyoming Business Corporations Act, a foreign limited liability company shall do business in Wyoming by complying with the provisions of W.S. 17-16-1501 through 17-16-1536 in the same manner as a foreign corporation. A foreign limited liability company’s certificate of authority shall be revoked or reinstated in the manner provided for foreign corporations in W.S. 17-16-1530 through 17-16-1532. W.S. 17-29-114 Added by Laws 2016 , ch. 42, § 1, eff. 3/4/2016.”
While the cases I reviewed do not explicitly address crypto laws, they are instrumental in providing a deeper understanding of the overall legal environment in Wyoming, especially concerning LLCs. Discussions around the rights and duties of members and managers, enforceability of noncompete agreements, and the scenarios in which a court may hold LLC members personally liable are critical for anyone operating or planning to operate in Wyoming’s progressive business landscape. Please see below for some relevant cases and excerpts that may be useful with respect to Wyoming Crypto LLC’s:
In conclusion, my thorough analysis underscores Wyoming’s trailblazing role in adapting its legal structures to foster growth in the blockchain and cryptocurrency sectors. This approach not only positions Wyoming at the forefront of digital innovation but also serves as a model for other jurisdictions looking to embrace the potential of blockchain and digital currencies. Having said this, Florida is in the process of enacting its own crypto DAO bill and is worth keeping an eye on, because it remains a highly favorable crypto jurisdiction in the United States.