At the end of February 2019, the governor of Wyoming signed into law a series of bills aimed at making Wyoming a friendly jurisdiction for blockchain innovation.
One of these bills, HB0074, authorized the banking commissioner to charter "special purpose depository institutions," that will be empowered to offer needed banking services to blockchain companies. The advertised purpose of the law is to fill the gap left by banks who are unable or unwilling to provide depository and custody services to blockchain and cryptocurrency businesses. The special purpose depository institutions are treated as banks under Wyoming law, and will be permitted to conduct non-lending banking business for corporate clients. The permitted banking business includes "digital asset custodial services" that are specifically authorized for banks, beginning on July 1, 2019, by another recently enacted Wyoming law. Importantly, Wyoming's special purpose depository institutions will avoid the federal supervision that limits other banks' ability to serve blockchain businesses, as they will not be required to obtain FDIC insurance. Instead, they will be required to maintain reserves of cash and other high-quality liquid assets equal to at least 100% of their deposits.
While exciting, it will still be some time before the new law impacts the cryptocurrency market. The law directs the Wyoming banking commissioner to adopt detailed regulations that will govern the special purpose depository institutions by October 1, 2019—which is also the date the new law goes into effect—and the first applications are not likely to be approved until several months later.
Originally published May 15, 2019, on PAI News.
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