Wyoming Paves the Way in Blockchain Legislation–Issues New Bill for Tokenizing Stocks
Wyoming continues to spearhead blockchain adoption with House Bill 0185. The bill, scheduled for July 1st if passed, permits corporations to issue blockchain-based stock certificate tokens. This bill is just one in a string of new legislation, cementing Wyoming’s position as the pro-crypto state.
Tokenization is the process of representing ownership of real-world assets digitally on a blockchain. The tokenization of assets such as stocks, real estate, or art is already happening. Some companies are even making headway into tokenizing shares of Nasdaq traded stocks.
Tokenizing Stocks in Wyoming
Proposed on Jan. 16th, the new HB0185 bill would allow companies to make distributions, authorize shares, and make amendments—and make those actions legally binding—even if conducted via blockchain technology. As stated in the current draft of the bill:
“A BILL for AN ACT relating to corporate shares and distributions; authorizing corporations to issue certificate tokens in lieu of stock certificates as specified; making conforming amendments; and providing for an effective date.”
These new rules would replace the formerly cumbersome and manual processes around corporate governance with a more efficient digital solution. This has the potential to make the process more transparent and more cost-effective.
The tokenized certificates would also be authorized via network signatures–unique identifying hashes of two officers or directors of a corporation, allowing parties to take advantage of the unique properties of blockchain-facilitated cryptography.
The bill, if passed, would become effective on July 1st. And, based on Wyoming’s voting history, the bill is quite likely to pass. The bill is sponsored by the representatives Olsen, Brown, Hunt, Lindholm, Western and Zwonitzer—and Senators Driskill and Rothfuss.
In short, the bill is laying the legal groundwork for storing, as well as performing, the administrative actions needed to maintain a company via blockchain.
Wyoming’s Other Blockchain Bills
HB0185 is only one in a series of bills in Wyoming’s blockchain initiative. Two other bills, HB0062, and HB0057 were recently passed (unanimously) in the state’s legislature.
Bill HB0062, “Wyoming Utility Token Act–property amendment,” established a clearer definition of utility tokens, and specifies that these tokens are more akin to property than securities. This bill allows certain tokens to potentially avoid more stringent federal securities laws.
Bill HB0057, titled “Financial Technology Sandbox,” provides a managed, secure testing environment for corporations wishing to experiment and develop blockchain and crypto-related businesses. The bill would give state agencies the ability to administer waivers to specific regulations, which could otherwise hinder potential innovation within the industry.
Another bill, HB0070, “Open blockchain tokens-exemptions,” would provide special state exemptions for entities who sell or facilitate the exchange of “open blockchain tokens.” These businesses would no longer be subject to specific securities and money transmission laws—provided they get approval from the state secretary and Wyoming’s banking commissioner. Some example of open blockchain tokens, as suggested by William Hinman—the director of the SEC division of corporate finance—might include bitcoin and ether. This bill could make the state more attractive for transactional businesses and exchanges looking to establish themselves in the United States.
People are Taking Notice
These progressive crypto bills have not gone unnoticed. Some blockchain-related businesses—such as Cardano’s primary development company IOHK, as declared by CEO Charles Hoskinson—are now planning to relocate their business to Wyoming.
Times are changing, and Wyoming seems to be leading the way with a pro-crypto legislature. Now, whether other states will follow Wyoming’s lead is another question.
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