Wyoming and Vermont Look to Blockchain for Economic Development

By Deborah Dobson posted 07-12-2018 11:57


A small number of states see blockchain technology as a way to attract new businesses to their state to spur economic development. In March 2018, Wyoming Governor Matt Mead signed sweeping legislation that makes limited liability corporation (LLC) laws friendlier to blockchain companies. The new laws do the following:

  • cryptocurrency can now be traded freely in Wyoming;
  • virtual currency will be exempt from property taxes;
  • corporations can use blockchain technology to securely store company records;
  • “initial coin offerings,” which function like initial public offerings but with virtual, blockchain-based tokens rather than traditional stock shares, will become legal;
  • a new corporation type called “series LLCs,” was created with blockchain businesses in mind.

According to State Representative Tyler Lindholm, a Republican who sponsored key parts of the blockchain legislation, two or three crypto-related companies have registered in Wyoming each day since the legislature finished its annual 20-day session in March.

On May 30, 2018, Vermont Governor Phil Scott signed into law Senate Bill 269: An Act Related to Blockchain Business Development, which became effective on July 1st. The Act is designed to stimulate economic development in Vermont through the promotion of blockchain technology.

Starting July 1st, Vermont is allowing companies to incorporate in the state using a new type of business entity – a blockchain-based limited liability company, or a “BBLLC,” for limited liability companies that utilize blockchain technology for a material portion of their business.

The law allows LLCs to become BBLLCs by (1) specifying in their respective articles of organization the election to be a BBLLC; and (2) meeting the requirements of the new law.

Among the requirements for setting up a blockchain-based company in Vermont: applicants must "specify whether the decentralized consensus ledger or database utilized or enabled by the BBLLC will be fully decentralized or partially decentralized and whether such ledger or database will be fully or partially public or private, including the extent of participants' access to information and read and write permissions with respect to protocols."

A BBLLC may (1) adopt any reasonable algorithms that it chooses to validate records, as well as requirements, processes, and procedures for conducting its operations, (2) select the blockchain technology that it will use, and (3) modify the existing processes or substitute new ones.

The newly signed Vermont law also calls for the Department of Financial Regulation to review the potential application of blockchain technology for the insurance and banking industries, and to consider areas of potential adoption and necessary regulatory changes. The study is due earlier than January 15, 2019.