Earlier today blockchain evangelist Caitlin Long announced on LinkedIn that HB-70, the Utility Token ICO bill passed the Senate and is now on the Governors desk. We reported on this bill last month when it passed the house. This marks a huge step for ICO’s and has the potential to create a cryptocurrency hub in the state with a dearth of new economic activity.
What is HB-70?
HB-70 is proposed law in Wyoming which aims to tackle the ambiguity surrounding the meaning of a “utility token”. While the issue has been tackled in the past by the infamous SEC memo, much ambiguity still surrounds the definition with many deferring to the Howey test derived from a supreme court case in the 1940’s to determine whether or not a token constitutes a security. This ambiguity has landed more than a few founders in jail and the federal governments inaction has left it up to the states to regulate what constitutes a “utility token”.
In comes HB-70 which offers a clear, unambiguous definition. It states that in order for a token to be classified as a utility token, or “open blockchain token”, it must meet the following conditions:
- The token has not been marketed by the protocol developers as an investment opportunity.
- The token is exchangeable for goods or services. (This basically excludes pre-sales, as it seems to mandates protocols must work before tokens are issued)
- The protocol developer has not entered into a repurchase agreement of any kind or entered into an agreement to locate buyers for the token.
This is the fourth bill in Wyoming to pass the Senate out of 5 proposed in 2018. While this bill focuses on utility tokens it’s just one of a broader set of bills aimed at making Wyoming what Long calls “A Haven for Blockchain”.
- HB-101: The “blockchain records bill” which would allow companies to store internal documents and databases on the blockchain. It Passed the Senate and House Unanimously and currently awaiting passage by the Governor.
- HB-126: An act aimed specifically aimed at LLC’s looking to do Blockchain seeks to encourage companies to register in Wyoming as opposed to Deleware. Deleware currently leads the pack in terms of corporate registrations. This bill passed the Senate 28-2 and is currently awaiting passage by the Governor.
- HB-19: Provides an exemption to an act restricting monetary transfers to virtual currencies. This act was mainly targeted at Bitcoin.
- SF-111: Aimed at eliminating state property tax on Cryptocurrency Assets passed its third reading in the house today. The only bill in this article that has not passed the House and Senate yet.
Setting a precedent
Wyoming and Delaware’s race to become the blockchain capital are sure to set a precedent with other states vying for a slice of the cryptocurrencies ever-expanding market cap. These bills aren’t law yet but given the Governor’s support, they are sure to pass. A bigger risk is that the SEC could nullify HB-70. Time will tell as the SEC navigates the new, volatile, and often dangerous cryptocurrency markets.
Featured image from Shutterstock.