In a bid to demonstrate the significance ofadvancing and legitimizing virtual currenciesand Blockchain-based businesses across the U.S, the state of Wyoming hasproposed the introduction of a new bill. This bill is designed to clarify ormake members of the cryptocurrency and Blockchain communities understand thelegal position of virtual assets and offer digital asset custody via banksinstead of financial institutions, as is the case in the current framework.
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The new Bill proposed by the Wyoming legislature offersthree classifications regarding what digital assets should be tagged. They includedigital securities (which will receive similar treatment as uncertificatedsecurities under the UCC), digital customer tokens (which will get the sametreatment as general intangibles under the UCC) and virtual currencies (whichwill give digital currencies similar treatment with fiat currency in Wyoming).
New Bill: Banks in Wyoming Could be Authorized to Adoptan Enhanced Supervision Program for Digital Asset Custody
Looking at the custody side of the endeavor, the activation of the new Bill means that the state ofWyoming could give banks the authority to initiate an enhanced supervisionregime regarding digital asset custody. Thisis designed to satisfy the SEC’s requirements regarding who should be the“qualified custodians” of cryptocurrencies.
The custody advancement for virtual assets in the U.S stateis also significant because it would beinitiated through banks. Although the bank wouldn’t take deposits ofdigital assets, the assets would be regarded as “assets under administration”instead of bank deposits.
Digital Assets Could Have A Similar Legal Status as Fiat
Money has “super-negotiability” stipulations under the UCC(Uniform Commercial Code) Article 9, and now Wyoming is looking give virtualcurrencies a similar structure.
This classification will benefit coin lending businesses inWyoming. It will give crypto and Bitcoin (BTC) more legitimacy. Bitcoin (BTC)would have the much desired legal status without involving an intermediary.Which is why it is safe to say the new legislation is a reflection of thepeer-to-peer nature of cryptocurrencies without the involvement of anyintermediary.
There is no debtor/creditor relationship without theintermediary, and the owners ofcryptocurrencies would have their property rights recognized under state law.
Classifications Will Give Legal Status to Digital Assets
These new classifications under the new legislation are important because they offer digital assetslegal status which is something that hasn’t been offered by any region in the country. Startups like FidelityInvestments, Coinbase, Bakkt, Kraken, and SALT Lending, to name a few aretaking some degree of legal risk. The reason for this is because no one can really determine how a judge in a bankruptcycase or litigation will classify digitalassets without clearly stipulated laws.
Overall, the securities custody sector has at least $114trillion of assets under its administration, which are being issued on the Blockchain with startups like FidelityInvestments delving into the business, Bakkt with its futures exchange is doingthe same thing. However, in the state of Wyoming, it will be done under a bank,and not a trust company under the new legislation. This could operate nationwide, and make the SEC happier becausebanks have more unambiguous wind-upprovisions in insolvency that trust companies don’t.