Trends and Developments in Cryptocurrency Laws in Wyoming

The digital assets industry worldwide considers Wyoming the prime domicile for corporate activities. Since 2018, Wyoming’s legislators have taken a proactive approach to attract participants in the digital assets industry to Wyoming. The initial pieces of legislation have evolved to include new corporate structures and, most recently, Wyoming’s own stablecoin.

Those counselling those in the digital assets industry need to be acutely aware that while Wyoming’s legislation is favourable, the status of federal legislation remains in flux. While the Trump administration has undertaken favourable treatment and receptiveness to the digital assets industry, that does not necessarily mean that federal securities and commodities laws may not apply. Keeping in mind the federal system that is the backbone of the United States, the most optimal strategy for conducting business in digital assets is to maintain all corporate structures, banking relationships and even customers within the borders of Wyoming as much as possible.

Notwithstanding, one point regarding Wyoming corporate structures versus those of other states is of importance to those outside of the United States, namely that Wyoming, unlike Delaware, does not have an “implied consent” rule that imposes jurisdiction upon officers of Wyoming LLCs and other entities. However, like Delaware, Wyoming now has a Chancery Court specifically for the resolution of commercial disputes. Given that submission of matters to Chancery Court must be mutual, it is advised that parties agree to Chancery Court jurisdiction in operative documentation.

A brief summary of the structures and provisions of Wyoming’s laws is provided below:

• The Wyoming legislature has recognised that blockchain businesses in general have difficulty opening and maintaining traditional banking relationships due to FDIC and OCC inclusion of blockchain ventures in the same buckets as firearms and cannabis. Wyoming will now permit corporate entities to charter “special purpose depository institutions”, which will perform all traditional bank functions except for lending. With the lending exclusion, these institutions will be under the primary supervision of the Wyoming Banking Commission and not the federal government. These banks will be required to maintain at least 100% of reserves against deposits as well as (i) USD5 million of capital, (ii) three years of operating expenses and (iii) private insurance against theft, cybercrime and other wrongful acts. As has been widely reported, federal banking regulators in the United States did not look at all favourably upon SPDIs up until very recently, preventing them from gaining access to the “fed window”, which is a necessary component of any bank. Some SPDIs have undertaken what one would call “correspondent” relationships with other banks, allowing them to piggyback on those institutions’ electronic access to the broader US banking system. These developments have been the impetus for the creation of Wyoming’s stablecoin, FRNT, in 2025. The SPDI legislation can be summarised as follows:
1. Wyoming banks seeking to custody digital assets (including newly created Special Purpose Depository Institutions (SPDIs) under recently enacted law) must apply to the WBC at least 60 days prior to custody activity for approval to do so. Banks must provide the WBC with (i) an outline of the custodial services to be rendered, (ii) the identity of the auditor who has been retained for custody audit, (iii) a review of the financial condition of the bank to demonstrate that custody of digital assets will not affect the soundness of the bank, and (iv) an operational risk mitigation plan. In addition, banks must have annual testing for cybersecurity and penetration of security media, along with AML/KYC procedures. Where a bank seeks to utilise outsourced providers or services for certain aspects of custodial services, that bank must demonstrate that it has performed a reasonable level of due diligence on the provider and the services it seeks to render.
2. Banks may custody digital assets of clients and others. In the case of a bank client with an account at the bank, the digital assets are to be held in the name of that client in line with common precepts of account segregation under Rule 206-4(2) of the Investment Advisers Act of 1940. Likewise, in the case of a non-client of a bank or a “client of a client” (eg, an exchange holding digital assets of its own customer), the bank must be named as an agent or trustee of the digital assets. Custody in a suitable bailment structure is to be chosen by the client, including but not limited to the ability of the custodian to honour written transaction instructions from that client.
3. Wyoming banks that choose to custody digital assets must take reasonable steps that transactions undertaken on behalf of customers to purchase or sell such assets adhere to concepts of “best execution”. That is, a bank must take into account the mark-up/mark-down, commissions and services provided by a broker-dealer or exchange to ensure that such transactions are consummated as economically as possible. Banks must also have sound valuation methodology for digital assets from reliable sources.
4. Custodians and their clients are to agree on the protocols for maintenance and application of block source code in the event of “forks” of digital assets. Custodians will have an obligation to inform clients of “forks” and their intent to custody assets under old block source code versus new block source code of “forks”.
5. Agreements for custody of digital assets by banks in Wyoming must (i) designate Wyoming law to apply, (ii) designate Wyoming as the venue for the resolution of any disputes, (iii) agree that all transactions are deemed to have taken place in Wyoming and (iv) agree that assets in custody at the bank are indeed located in Wyoming.
6. Assets (keys) are generally to be held in “cold” storage unless “hot” storage is needed to facilitate a transaction by a customer. In order for “cold” storage to be deemed lawful custody, a bank must have physical security that requires at least two authorised key holders with security badges and at least two of the following multifactor authentication methods, those being (i) personal knowledge via a login or PIN, (ii) an access card or other computer program and (iii) biometrics. Access to the physical storage facility shall be limited to authorised persons through multifactor identity verification, which shall be annually verified by the independent public accountant, consistent with industry best practices. Prospective employees involved with these tasks will need to submit to background and security checks.
7. The cash balances of clients whose accounts hold digital assets may be invested in, among other things, (i) debt securities rated AAA and above and (ii) gold. Cash balances are not limited to being traded in US treasury securities.
• Wyoming specifically authorises banks (including SPDIs) to hold digital assets in custody under their charter trust powers and in accordance with Rule 206-4(2) of the Investment Advisers Act of 1940. With recent streamlining of UCC provisions to address digital assets in the United States, Wyoming is a favourable jurisdiction for those lending or securing funds through digital assets, as well as for swaps and derivative instruments.
• Those entrepreneurs in the blockchain industry who may require special treatment or waivers of unclear regulation in Wyoming can now seek to avail themselves of a “regulatory sandbox”. Use of the “sandbox” will require applications to state agencies that may have interests in the requested waiver, including the Wyoming Banking Commission and the Wyoming Securities Commission. The “sandbox” will provide a two-year period of relief from legislation for those ventures, all of which must be domiciled and operating within Wyoming.
• Wyoming has legislation authorising and permitting the creation of digital assets that represent certificated shares of stock. A “certificate token” under this legislation has been defined as “a representation of shares” that is (i) entered into a blockchain or other secure, auditable database, (ii) linked to or associated with the certificate token and (iii) electronically transmittable to the issuing corporation, the person to whom the certificate token was issued and any transferee.
• Given that Wyoming utilities produce some of the cheapest and most abundant electricity in the United States, Wyoming has, through HB 113, enabled those utilities to negotiate power rates with blockchain companies (including miners) and others without approval from Wyoming’s Public Utility Commission.
• Wyoming also has provisions for (i) issuance of municipal debt through digital assets and (ii) creation of captive insurers that can utilise digital assets as reserves. The captive insurance provision supplements already favourable trusts and estates laws in Wyoming.
• In addition to typical corporate structures, Wyoming has both decentralised autonomous organisations (DAO) and decentralised unincorporated non-profit associations (DUNA):

1. DAOs are member-controlled organisations that operate without central authority or hierarchical management. Smart contracts are utilised instead. The smart contract location is required on any application for a Wyoming DAO. There are other governance requirements that need to be memorialised as operating by-laws.

1. DUNAs are the non-profit equivalents of DAOs, and must have at least 100 members, as well as 501(c)(3) status from the United States Internal Revenue Service. While of limited usage to most profit-driven enterprises, DUNAs may prove to be useful as structures involving the distribution of open-sourced software.
• Finally, Wyoming has recently launched the Frontier stablecoin (FRNT). Its backing consists of US dollars and short-term US treasuries, both of which are held in trust. To enhance confidence, it is structured to be 2% over-collateralised, ensuring that its assets always exceed the number of tokens in circulation. Wyoming anticipates that FRNT will be used by the blockchain community as an alternative to other stablecoins. Likewise, Wyoming considers most digital assets to be “personal property” not subject to state taxation.