Wyoming may have just solved the NY BitLicense problem by introducing regulations for crypto custody platforms.
November 12, 2019, | AtoZ Markets – The United States’ state of Wyoming has mostly been welcoming of the crypto revolution, enacting several new regulations that will encourage the adoption of the technology and the growth of startups operating within its jurisdiction.
New Wyoming crypto custody regulations solve NY BitLicense problem
On Monday, Wyoming went a step further by introducing crypto custody regulations that potentially opens a way for startups who do not want to subject themselves to the perceived rigorous process of obtaining a BitLicense.
First shared on Twitter by Caitlin Long, a member of the Wyoming Blockchain Task Force, the new crypto custody regulations is optional for crypto startups who hold custody of cryptocurrencies entrusted to them by clients.
1/ NEWS out of #Wyoming ahead of #ConsensusInvest, previewed by Chris Land, gen. counsel of WY Banking Division at #FordhamLaw #blockchain regulation conf today:(1) solution to #BitLicense prob for #crypto cos=open a NY branch of a WY SPDI; (2) Wyoming just released custody rules pic.twitter.com/LTcTbVnipP— Caitlin Long 🔑 (@CaitlinLong_) November 11, 2019
Furthermore, such entities are classified as “special purpose depository institutions” (SPDIs) or popularly “blockchain banks” in Wyoming. As previewed by Chris Land, gen. counsel of the Wyoming Banking Division, they qualify as state-chartered banks.
Clarifying rules to protect customers
The U.S federal laws put state-chartered banks in the same category as national banks. This means that they can provide services to customers in 42 states, including New York. Also, given that New York exempts national banks from applying for the BitLicense could mean that theoretically, these “blockchain banks” are exempt from using a BitLicense.
Put simply, opening a ‘blockchain bank’ in Wyoming likely means that a crypto startup could begin to serve NY customers. This they can do by merely opening a branch in New York and not by applying for a BitLicense.
However, that would require that they comply with the newly released crypto custody regulations in Wyoming. But Caitlin Long sought to assure that the new Wyoming crypto custody regulations are friendly. This is because the crypto industry participants, including attorneys, have reviewed it.
Moreover, Christopher Allen, an internet cryptography pioneer, also agreed, praising the regulatory framework “as one that outlines real requirements of what qualified custodianship of digital assets should be.”
Will crypto startups use the Wyoming SPDI opportunity as an alternative to the long-maligned NY BitLicense requirement? Only time will tell.
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