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The new bill by Wyoming classifies digital assets as property while legalizing its uses in other blockchain-based financial services.
Lawmakers of the State of Wyoming in the United States has recently three new bills to promote blockchain and cryptocurrency businesses. Last week on February 14, the Wyoming House of Representatives approved the bill SF0125. The bill notes that Wyoming law recognizes cryptocurrency assets as a property.
Furthermore, the bill clears the way for traditional banking institutions to act as crypto custodians. 29 representatives from the House favored the bill while none voted against it. The new bill goes to define digital assets as “a representation of economic, proprietary or access rights that is stored in a computer-readable format, and includes digital consumer assets, digital securities and virtual currency.”
Upon approval of the bill by Wyoming state governor Mark Gordon, it will become an official law by July 1. After this, digital assets will be classified as “property” under the Uniform Commercial Code. The bill document notes:
“Digital consumer assets are intangible personal property and shall be considered general intangibles, as defined in W.S. 34.1‑9‑102(a)(xlii), only for the purposes of article 9 of the Uniform Commercial Code, title 34.1, Wyoming statutes.”
Analysis of the Bill
Caitlin Long, a Wyoming-based blockchain advocate shares the great news while explaining in detail its importance for the state. You can follow the entire thread by Long, on her Twitter account.
1/ BOOM! #Wyoming just recognized clear, direct property rights for #digitalassets by passing SF125! This means #blockchain cos will prob want to apply WY law to your contracts, domicile here, &/or have a physical presence here. Thx again to the army of ppl who helped over months pic.twitter.com/I4E3GfPZbC
— Caitlin Long ? (@CaitlinLong_) February 14, 2019
With property laws under the control of the state jurisdictions. Thus the new law can be free from the indulgence of state government and also sets a precedence for other states.
“It makes perfect sense that Wyoming is the epicenter of blockchain law in the US. That’s also why institutional investors, which are prohibited by federal law from directly owning the assets they manage, can rest assured that Wyoming’s digital asset custodians are actually solvent,” said Long.
Long also goes to explain that the bill makes the ownership of digital assets much easier and direct. Long states:
“In other words, you’re not forced to own digital securities through an intermediary. Blockchain tech enables direct ownership of assets, and now the law does too.”
Furthermore, the text of the bill classifies digital assets in three different categories. This includes digital securities, digital consumer assets, and virtual currencies. All three definitions specifically treat digital assets as personal property instead of private property.
Legalization of Digital Assets to Foster Blockchain Innovation
The bill also goes to specify the terms and conditions for each of the three definitions for digital assets. Also, the bill states that “virtual currency is intangible personal property and shall be considered money”.
Thus the legal definition of cryptocurrencies provided in this concise manner opens up the gates to treat them as actual currencies on daily basis. This can also provide a stimulus for comprehensive tax code and new business use cases.
Also, the legalization of cryptocurrencies helps to provide new blockchain-based financial services while encouraging innovation. The bill notes:
“The rapid innovation of blockchain technology, including the growing use of virtual currency and digital assets, has resulted in many blockchain innovators being unable to access secure and reliable banking services, hampering the development of blockchain services and products in the marketplace”.