Wyoming is opening its doors for cryptocurrency in an attempt to become the most crypto friendly state in the United States. The State which is about 1,000 miles from Silicon Valley and also far away from the wealthy East Coast investors is open up to crypto investors in an effort to reinvent itself. The state’s governor Matt Mead signed sweeping legislation in March to make limited liability corporation laws friendlier to Blockchain companies, utility tokens and exempting cryptocurrency which is taxed by the IRS as a physical property from the property taxes.
The legislation led to companies with the name Crypto or Blockchain in their names to move to the state. According to Davis pope who is an executive director at the Wyoming Blockchain coalition: “This is a very exciting thing, and it will create attraction as we gain toward Delaware.”
Wyoming which was the first state to allow LLCs in 1997 lost the race after it was surpassed by Delaware for corporate registrations. In fact, as Wyoming takes in 30 million dollars in LLC registration, Delaware takes in more than 40 times that amount.
Since the completion of the March legislature, about three crypto-related companies have registered there daily according to Tyler Lindholm who is a State Representative. Lindholm says the influx in registration and filing fees alone would bring in a lot of money into the state where mining and energy majorly drive the economy. The economy is expected to grow as bigger companies set up offices in the state.
Many companies raising capital through ICOs are looking for the funds from overseas to avoid US financial rules. According to Charles Dusek who is the founder of a startup called Node Haven hoping to raise 50 million dollars through an ICO: “We have been advised to move offshore to execute the token sale.” Node Haven was registered in Wyoming in mid-April to take advantage of the tax benefits.
The startups are looking for funds abroad because SEC has been cracking down cryptocurrencies. SEC chairman Jay Clayton said that he did not see any ICO that does not have the hallmarks of security making it necessary for all of them to comply with capital-raising regulations.
However, Jeff Bandman who runs Bandman Advisors says:
“I don’t see Wyoming getting into a fight with the SEC because what Wyoming has tried to do is identify areas within the scope of state security and financial-services law.”
SEC has however not commented on the Wyoming laws.
Lindholm says he is not concerned much about running afoul with the SEC because he and others have already formed a blockchain taskforce and have invited the SEC for their meeting next month. The meeting will be mainly to demonstrate how Blockchain can be used to track biological information of cattle as scribbled in a rancher’s notebook.
Other states in the US like North Dakota and New Hampshire are also planning to pass similar laws in order to attract crypto and Blockchain companies.