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Wyoming's governor has signed SF 127 enacting the Wyoming Stable Token Act, creating the Wyoming stable token commission, and authorizing the issuance of stable tokens in the state. Under the Act, a Wyoming stable token is "a virtual currency representative of and redeemable for one United States dollar held in trust by the state of Wyoming" that may only be issued in exchange for a USD. The Act also outlines criteria relating to liability limitations and requires that the commission issue at least one Wyoming stable token no later than December 31, 2023.

Just over two weeks ago, Kraken Financial received the first Special Purpose Depository Institution (SPDI) charter from the Wyoming Banking Division. The foundation has now been established for Wyoming to be the most crypto-friendly jurisdiction in the United States. Now that the laws are passed and the charter is issued, it is up to the Wyoming Banking Division regulators to begin the first-ever crypto bank examinations. Here, Commissioner Albert L. Forkner of the Wyoming Banking Division and Chris Land, General Counsel, provide an inside view of this historic moment in bank examinations.

Wyoming lawmakers have proposed the Wyoming Stable Token Act (SF0106), which paves the way for the crypto-friendly state to launch its own dollar-pegged token. The act would allow Wyoming treasurer Curtis Meier Jr. to create a state stablecoin pegged to the U.S. dollar. The token would be redeemable for a single dollar held in trust by the state.

A bill to recognize decentralized autonomous organizations (DAOs) as companies has passed through the Senate Committee stage in Wyoming. The legislation would make it easier and cheaper to set up a DAO and give legitimacy to many crypto-asset projects. DAOs are entities that operate through smart contracts, with financial transactions and rules encoded on a blockchain, effectively removing the need for a central governing authority. The Wyoming DAO bill now goes to a vote in the Senate, and then the House. If all is well, it's then signed into law. https://legiscan.com/WY/bill/SF0038/2021

"Wyoming has approved the first legally recognized decentralized autonomous organization (DAO) in the United States. The American CryptoFed DAO received notice from the Wyoming Secretary of State's office on Tuesday recognizing it as a legal entity. The American CryptoFed DAO was established by mobile banking solutions provider mSHIFT on July 1, 2021. The project describes its mission as promoting a two-token economy that is immune from inflationary or deflationary influences."

There's a way cryptocurrency businesses can get around New York's notoriously hard-to-get BitLicense, and it runs through Wyoming. At least, so say members of the team that drafted the 13 crypto-friendly laws enacted by the Western state this year. One of those laws allows Wyoming to charter Special Purpose Depository Institutions (SPDIs), a new type of fully-reserved fiat bank that can also custody crypto assets. With an SPDI, crypto exchanges and other startups could operate in New York without going through the state's licensing rigmarole, under the same legal principles that exempt banks from needing state money transmitter licenses, Wyoming advocates said.

The Wyoming Banking Board approved San Francisco-based crypto exchange Kraken's application for a special purpose depository institution (SPDI) charter. Kraken is now the first SPDI bank in Wyoming. Kraken will also be the first newly chartered (de novo) bank in the state since 2006. By becoming a bank Kraken gets direct access to federal payments infrastructure, and can more seamlessly integrate banking and funding options for customers. As a state-chartered bank, Kraken now has a regulatory passport into other states. Up now, Kraken relied on third-party providers for wire transfers and other services. https://blog.kraken.com/post/6241/kraken-wyoming-first-digital-asset-bank/

The Wyoming Division of Banking has granted "no-action" relief to Two Ocean Trust, a Wyoming-chartered trust company that provides wealth management services to high-net worth individuals, family officers and advisers. This regulatory clearance enables the company to provide custody services for both digital and traditional assets under Wyoming law and serve as a "qualified custodian" under the Investment Advisers Act of 1940. This is a potential game changer because under the SEC Custody Rule, investment advisers are required to store customer assets with a "qualified custodian." http://wyomingbankingdivision.wyo.gov/home/pressreleases/twooceanno-actionletterdigitalassetcustodyqualifiedcustodianstatus

SEC staff issued a public statement asking questions about the definition of "qualified custodian." That term is traditionally applied to banks, brokerages, and futures commission merchants. The statement, from the SEC's Division of Investment Management, follows a no-action letter from the Wyoming Division of Banking to a state-chartered public trust company, Two Ocean Trust. In it, the division judges Two Ocean to be a "qualified custodian" and therefore eligible to "provide custodial services for digital assets under Wyoming law, including virtual currency and digital (tokenized) securities." https://www.sec.gov/news/public-statement/statement-im-finhub-wyoming-nal-custody-digital-assets

"A judge on Friday denied the Federal Reserve's August motion to dismiss the master account lawsuit brought by Custodia Bank, ruling the bank had sufficiently argued that the Kansas City Fed engaged in "unreasonable delay" in processing its master account application. Custodia, which was granted a special-purpose depository institution (SPDI) license in Wyoming in 2020, has been waiting two years for the Fed to approve its application for a master account, a delay the bank has called "unlawful." Citing an argument the bank put forth, Judge Scott Skavdahl of the U.S. District Court for the District of Wyoming ruled Custodia had plausibly argued unreasonable delay because the Fed's standard form agreement states "[p]rocessing may take 5-7 business days.""

The State of Wyoming just got a big boost from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Their recent joint staff statement on broker-dealer custody of digital securities provides support for Wyoming's regulatory approach to the custody of digital assets.*

Avanti, a new crypto-asset bank to be based in US frontier state Wyoming, will take advantage of the state's potentially revolutionary new legal framework for the custody of clients' crypto assets. In contrast to hundreds of years of established practice in the global markets for banking and securities custody, Wyoming's laws emphasise that clients' assets cannot be reused without their consent.

The Bermuda Monetary Authority and the Wyoming Division of Banking will co-operate to facilitate the establishment of digital assets entities across jurisdictions and their effective supervision.

The U.S. state of Wyoming has officially recognized decentralized autonomous organizations (DAOs) as a new type of limited liability company, or LLC. DAOs are governed by the terms of smart contracts, without the hierarchical control structure seen in traditional companies. The new law solves several important legal issues, such as joint-and-several liability for all participants in a DAO, provided it is considered a partnership by court.

The US Office of the Comptroller of the Currency (OCC) has has conditionally approved crypto-asset custodian Anchorage's application for a national trust charter, and the creation of Anchorage Digital Bank. With a banking charter, Anchorage can provide sub-custody services - like holding assets for a main custodian - for any financial institution. Anchorage is the first crypto company to receive a federal charter, though Kraken and Avanti have both received state charters for digital banking services in Wyoming. While the Wyoming charter enables both Kraken and Avanti to operate nationally, it comes with certain limitations. https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-6.html

Wyoming recently awarded its second special-purpose depository institution (SPDI) charter to Avanti Bank. One of the most notable products that Avanti intends to offer is the "Avit" stablecoin "disruptor." Avanti Bank's Avit will be a tokenized, programmable US dollar. Becasue Avit will be issued by, and be a direct obligation of, a bank, making it an electronic version of a traditional bank note. This means the Avit can be used in software applications like other stablecoins but may be considered more reliable than traditional stablecoins because users can trust that the deposits backing the Avit are held in the same state chartered financial institution that issued the instrument. Critically, if the Avit is a bank note it is also exempt from regulation as a security by the SEC. One legal wrinkle is that Article 3 of the Uniform Commercial Code (UCC), which governs bank notes, has never before been directly extended to electronic negotiable instruments such as digital bank notes. Nevertheless, there is an argument that Article 3 provides the necessary legal framework for banks to issue a variety of electronic negotiable instruments, including digital certificates of deposits. One could argue that a bank issuing a product with features similar to a stablecoin is really just a new form of a traditional bank activity.

Wyoming-based Avanti Financial Group has filed an application to become a Member Bank of the Federal Reserve. This membership application is different from Avanti's prior application to obtain payment system access from the Federal Reserve via a master account, which Avanti filed in October 2020 and which remains pending. Avanti meets the requirements for both membership and payment system access, and with this latest application, Avanti becomes the first digital asset bank to seek formal regulation by the Federal Reserve in addition to its existing regulator, the Wyoming Division of Banking.

"Judge Scott Skavdahl of the U.S. District Court for the District of Wyoming said he likely would not dismiss the lawsuit Custodia Bank filed against the [Fed] earlier this year. Following oral arguments from all parties, Skavdahl declined to issue a ruling from the bench on the Fed's motion to dismiss the lawsuit. He noted that the scope of the suit might be adjusted but the matter would likely survive "in some form." Custodia, a Wyoming-chartered special-purpose depository, sued the Fed in June, hoping to compel it to make a decision on the company's roughly two-year-old application for a master account with the Kansas City Fed."

Caitlin Long had high hopes of bringing crypto into the mainstream financial system. Long's Custodia Bank in Cheyenne, Wyoming, a state-charted special purpose depository institution, or SPDI, was spearheading those dreams for all of cryptocurrency. Those dreams crashed into the concrete bollard of reality on January 27, 2023, when the Federal Reserve Board denied Custodia's application to be a Federal Reserve member bank, and the Federal Reserve Bank of Kansas City denied its application for a master account. The Board's full 86-page order, made public on March 25, details how Custodia failed to address "the heightened risks associated with crypto activities, including its ability to mitigate money laundering and terrorism financing risks." (The Kansas City Fed's denial letter was not made public.)

A federal judge has rejected Wyoming-based Custodia Bank's argument that it is entitled to a Federal Reserve master account and membership with the Fed. Judge Scott Skavdahl, of District of Wyoming, denied Custodia's motion for judgement on, writing that federal laws do not require the nation's central bank to give every eligible depository institution access to its master account system, nor did the provided evidence suggest that the Federal Reserve Board of Governors influence a regional branch of the Fed to deny its application for an account. Custodia is now "reviewing the Court's decision and all of [its] options, including appeal".