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 7^th 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.

The Impact of Blockchain Technology and Cryptocurrency

Not only is Wyoming the first state in the world to pass a bill that clearly defines cryptocurrencies, all five bills combined are meant to drive innovation in various ways.

First, the acceptance of cryptocurrency will change the way business is conducted in Wyoming, creating new opportunities and advancements for blockchain-backed companies.

Wyoming has been expanding and promoting its technology sector for seven years. Last year ENDOW- Economically Needed Diversity Options for Wyoming- was established. Its focus is to diversify our economy over a 20-year period. The ENDOW Executive Council made recommendations for legislative action this session including blockchain. Blockchain and cryptocurrency are technologies with the potential to change the way we do business,” Wyoming Governor Matt Mead told me. ”Wyoming’s technology infrastructure, the Unified Network and the Broadband Services Act are examples of Wyoming’s commitment to be on the cutting edge of technology and are part of the reason Wyoming is becoming known as a big technology state.  I applaud the Wyoming Legislature, the ENDOW Executive Council and others who helped advance a number of ENDOW bills – another step in Wyoming’s leadership in this field.

Another key point to note here is that the passing of these bills has enabled money transmitters to return to Wyoming.

“At a high level, one of the bills enable money transmitters to return to Wyoming,” Long said.

Long, and two of her close friends, created the Wyoming Blockchain Coalition in response to not being able to donate Bitcoins to the University of Wyoming Foundation last summer. Long soon discovered that Wyoming was one of three states where cryptocurrency exchanges were unable to conduct business due to the state’s money transmitter act, which led Coinbase and two other exchanges to pull out in 2015.

The Wyoming Blockchain Coalition, government officials and Wyoming citizens gather together

Caitlin Long

In response to bring money transmitters back to Wyoming, Long introduced five crypto related bills to the Wyoming government last month. The first one fixes the issue with the money transmitter act; the second one exempts utility tokens from the money transmitters and security laws (as long as they are exchangeable for goods and services and not marketed as investments); the third bill replicates the Delaware Blockchain Initiative; the fourth one is the series LLC bill and the fifth bill exempts cryptocurrencies from property taxes.

Caitlin Long, co-founder of the Wyoming Blockchain Coalition pictured with Wyoming State Representative, Tyler Lindholm

Caitlin Long

Overall, Wyoming government officials hope to see more blockchain related businesses and people involved in the crypto community flock towards Wyoming as a result of the new crypto bills.

At the very least, we are going to see companies paving roads and building schools in Wyoming,” Tyler Lindholm, Wyoming House District Representative, told me. “But I think it’s going to go a lot further than that – I think we are going to see economic development and new tech sector jobs coming into the state of Wyoming. That alone is a fantastic aspect. And, we are laying down cryptocurrency laws based on the premise that this isn’t just a one time shot for Wyoming. We plan on staying hungry and working with industries to develop laws and regulations that will allow individuals and businesses to practice their trades to how they see fit.

Meanwhile, it’s truly groundbreaking to see a U.S. state heavily involved in the advancement of the cryptocurrency ecosystem.