As the cryptocurrency ecosystem continues to evolve into an entire new economy, the U.S. government has been busy firing shots in multiple directions to enforce regulations.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are the two federal agencies that serve as the primary regulators of cryptocurrencies in the U.S. However, while both agencies are taking a stance to define “cryptocurrencies” in order to enforce regulations, both have differing views.
The SEC has made it clear that cryptocurrencies and tokens offered through Initial Coin Offerings (ICOs) are “securities,” and therefore illegal unless registered through the SEC. However, just last week a district judge backed the U.S. Commodity Future Trading Commission in defining cryptocurrencies as “commodities.” Judge Jack Weinstein from a district court in New York ruled that, “virtual currencies can be regulated by the CFTC as a commodity.”
Yet as the SEC and CFTC continue to decide whether or not cryptocurrencies are securities or commodities, one U.S. state is taking action by laying down the law at a state level.
Over the last several weeks, the Wyoming legislature has passed five bills into law that relate to the advancement of cryptocurrency and blockchain technology. And while all of these are notable, one law in particular makes Wyoming standout as being the first state in the world to define cryptocurrencies as an entirely new asset class.
Wyoming House Bill 70 Signed Into Law
Wyoming government officials believe that it is setting a strong example for the way in which the U.S. government will define cryptocurrencies with the passing of House Bill 70. Labeled the “Utility Token Bill,” Wyoming’s House Bill 70 was passed by the Wyoming State Senate on March 7th of last week. Governor Matt Mead just signed the bill into law this past weekend.
The Utility Token bill was designed to exempt specific cryptocurrencies from state money transmission laws and is the first of its kind to legally define the way in which specific types of crypto tokens are treated by regulatory bodies. The bill excludes “developers or sellers” of tokens from securities laws under the caveat that they meet certain conditions. In order to meet these requirements, the token must not be offered as an investment and must be a vehicle for exchange as a utility token.
The state of Wyoming is the first elected body in the world to define a utility token as a new type of asset class different from a security or commodity,” Caitlin Long, co-founder of the Wyoming Blockchain Coalition, told me. “This has been a hot topic in Washington D.C. recently, as the SEC considers cryptocurrencies to be securities, FinCEN says they’re generally money, and the CFTC views them as commodities. Now, however, you have a state coming out and defining utility tokens as a new form of property, and property is generally the purview of state law.
Long and the other members of the Wyoming Blockchain Coalition view the passing of House Bill 70 to be especially groundbreaking as this could be the first step to getting the U.S. congress to clarify how cryptocurrencies should be regulated.
This could be very positive for the cryptocurrency community if Congress can break the tie and clarify everything. It’s very exciting that Wyoming is the first state to define what a utility token is, setting an example of how this could become a standard under federal law. I do believe the Wyoming approach will work under federal securities law and am optimistic the SEC will agree, Long said.
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