Wyoming’s Trailblazing Path in Crypto Legislation: A Comprehensive Guide to Wyoming LLC Crypto Laws and Cases

digital assets and securities law

Short Summary

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:

  1. HB 19: Exempts cryptocurrency from the Wyoming Money Transmitter Act, reducing regulatory hurdles for crypto exchanges and wallet services.
  2. HB 70: Exempts utility tokens from securities regulations, acknowledging their unique nature in the digital economy.
  3. HB 101: Authorizes the use of blockchain technology in business, paving the way for innovative applications.
  4. HB 126: Creates “series LLCs” for blockchain and cryptocurrency businesses, enhancing legal structures to support these entities.
  5. SF 111: Exempts virtual currency from property taxation, making Wyoming an attractive location for crypto investments.

Overview

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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.

Relevant Statutes

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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:

Relevant Cases

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.

 

Legal Disclaimer

The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. The content presented is not intended to be a substitute for professional legal, tax, or financial advice, nor should it be relied upon as such. Readers are encouraged to consult with their own attorney, CPA, and tax advisors to obtain specific guidance and advice tailored to their individual circumstances. No responsibility is assumed for any inaccuracies or errors in the information contained herein, and John Montague and Montague Law expressly disclaim any liability for any actions taken or not taken based on the information provided in this article.

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