2019 SF 125 (SEA 39, Ch. 91) — Digital assets, existing law (W.S. 34-29-101 to -105)
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ORIGINAL SENATE ENGROSSED
FILE NO. SF0125
ENROLLED ACT NO. 39, SENATE
SIXTY-FIFTH LEGISLATURE OF THE STATE OF WYOMING
2019 GENERAL SESSION
AN ACT relating to property; classifying digital assets
within existing laws; specifying that digital assets are
property within the Uniform Commercial Code; authorizing
security interests in digital assets; establishing an opt-in
framework for banks to provide custodial services for digital
asset property as custodians; specifying standards and
procedures for custodial services under this act; clarifying
the jurisdiction of Wyoming courts relating to digital
assets; authorizing a supervision fee; making an
appropriation; authorizing positions; specifying
applicability; authorizing the promulgation of rules; and
providing for an effective date.
Be It Enacted by the Legislature of the State of Wyoming:
Section 1. W.S. 34-29-101 through 34-29-105 and
34.1-1-210 are created to read:
CHAPTER 29
DIGITAL ASSETS
34-29-101. Definitions.
(a) As used in this chapter:
(i) "Digital asset" means a representation of
economic, proprietary or access rights that is stored in a
computer readable format, and includes digital consumer
assets, digital securities and virtual currency;
(ii) "Digital consumer asset" means a digital
asset that is used or bought primarily for consumptive,
personal or household purposes and includes:
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2019 GENERAL SESSION
(A) An open blockchain token constituting
intangible personal property as otherwise provided by law;
(B) Any other digital asset which does not
fall within paragraphs (iii) and (iv) of this subsection.
(iii) "Digital security" means a digital asset
which constitutes a security, as defined in W.S.
17-4-102(a)(xxviii), but shall exclude digital consumer
assets and virtual currency;
(iv) "Virtual currency" means a digital asset that
is:
(A) Used as a medium of exchange, unit of
account or store of value; and
(B) Not recognized as legal tender by the
United States government.
(b) The terms in paragraphs (a)(ii) through (iv) of
this section are mutually exclusive.
34-29-102. Classification of digital assets as
property; applicability to Uniform Commercial Code.
(a) Digital assets are classified in the following
manner:
(i) Digital consumer assets are intangible
personal property and shall be considered general
intangibles, as defined in W.S. 34.1-9-102(a)(xlii), only for
the purposes of article 9 of the Uniform Commercial Code,
title 34.1, Wyoming statutes;
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2019 GENERAL SESSION
(ii) Digital securities are intangible personal
property and shall be considered securities, as defined in
W.S. 34.1-8-102(a)(xv), and investment property, as defined
in W.S. 34.1-9-102(a)(xlix), only for the purposes of
articles 8 and 9 of the Uniform Commercial Code, title 34.1,
Wyoming statutes;
(iii) Virtual currency is intangible personal
property and shall be considered money, notwithstanding W.S.
34.1-1-201(b)(xxiv), only for the purposes of article 9 of
the Uniform Commercial Code, title 34.1, Wyoming statutes.
(b) Consistent with W.S. 34.1-8-102(a)(ix), a digital
asset may be treated as a financial asset under that
paragraph, pursuant to a written agreement with the owner of
the digital asset. If treated as a financial asset, the
digital asset shall remain intangible personal property.
(c) A bank providing custodial services under W.S.
34-29-104 shall be considered to meet the requirements of
W.S. 34.1-8-102(a)(xiv).
(d) Classification of digital assets under this section
shall be construed in a manner to give the greatest effect to
this chapter, but shall not be construed to apply to any other
asset.
34-29-103. Perfection of security interests in digital
assets; financing statements.
(a) Notwithstanding the financing statement
requirement specified by W.S. 34.1-9-310(a) as otherwise
applied to general intangibles or any other provision of law,
perfection of a security interest in a digital asset may be
achieved through control, as defined in paragraph (e)(i) of
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2019 GENERAL SESSION
this section. A security interest held by a secured party
having control of a digital asset has priority over a security
interest held by a secured party that does not have control
of the asset.
(b) Before a secured party may take control of a digital
asset under this section, the secured party shall enter into
a control agreement with the debtor. A control agreement may
also set forth the terms under which a secured party may
pledge its security interest in the digital asset as
collateral for another transaction.
(c) A secured party may file a financing statement with
the secretary of state, including to perfect a security
interest in proceeds from a digital asset pursuant to W.S.
34.1-9-315(d).
(d) Notwithstanding any other provision of law,
including article 9 of the Uniform Commercial Code, title
34.1, Wyoming statutes, a transferee takes a digital asset
free of any security interest two (2) years after the
transferee takes the asset for value and does not have actual
notice of an adverse claim. This subsection only applies to
a security interest perfected by a method other than control.
(e) As used in this section:
(i) Consistent with subsection (f) of this
section, "control" is equivalent to the term "possession"
when used in article 9, title 34.1, Wyoming statutes and means
the following:
(A) A secured party, or an agent, custodian,
fiduciary or trustee of the party, has the exclusive legal
authority to conduct a transaction relating to a digital
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2019 GENERAL SESSION
asset, including by means of a private key or the use of a
multi-signature arrangement authorized by the secured party;
(B) A smart contract created by a secured
party which has the exclusive legal authority to conduct a
transaction relating to a digital asset. As used in this
subparagraph, "smart contract" means an automated
transaction, as defined in W.S. 40-21-102(a)(ii), or any
substantially similar analogue, which is comprised of code,
script or programming language that executes the terms of an
agreement, and which may include taking custody of and
transferring an asset, or issuing executable instructions for
these actions, based on the occurrence or nonoccurrence of
specified conditions.
(ii) "Multi-signature arrangement" means a system
of access control relating to a digital asset for the purposes
of preventing unauthorized transactions relating to the
asset, in which two (2) or more private keys are required to
conduct a transaction, or any substantially similar analogue;
(iii) "Private key" means a unique element of
cryptographic data, or any substantially similar analogue,
which is:
(A) Held by a person;
(B) Paired with a unique, publicly available
element of cryptographic data; and
(C) Associated with an algorithm that is
necessary to carry out an encryption or decryption required
to execute a transaction.
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2019 GENERAL SESSION
(f) Perfection by control creates a possessory security
interest and does not require physical possession. For
purposes of article 9, title 34.1 and this section, a digital
asset is located in Wyoming if the asset is held by a Wyoming
custodian, the debtor or secured party is physically located
in Wyoming or the debtor or secured party is incorporated or
organized in Wyoming.
34-29-104. Digital asset custodial services.
(a) A bank may provide custodial services consistent
with this section upon providing sixty (60) days written
notice to the commissioner. The provisions of this section
are cumulative and not exclusive as an optional framework for
enhanced supervision of digital asset custody. If a bank
elects to provide custodial services under this section, it
shall comply with all provisions of this section.
(b) A bank may serve as a qualified custodian, as
specified by the United States securities and exchange
commission in 17 C.F.R. § 275.206(4)-2. In performing
custodial services under this section, a bank shall:
(i) Implement all accounting, account statement,
internal control, notice and other standards specified by
applicable state or federal law and rules for custodial
services;
(ii) Maintain information technology best
practices relating to digital assets held in custody. The
commissioner may specify required best practices by rule;
(iii) Fully comply with applicable federal
anti-money laundering, customer identification and beneficial
ownership requirements; and
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2019 GENERAL SESSION
(iv) Take other actions necessary to carry out
this section, which may include exercising fiduciary powers
similar to those permitted to national banks and ensuring
compliance with federal law governing digital assets
classified as commodities.
(c) A bank providing custodial services shall enter
into an agreement with an independent public accountant to
conduct an examination conforming to the requirements of 17
C.F.R. § 275.206(4)-2(a)(4) and (6), at the cost of the bank.
The accountant shall transmit the results of the examination
to the commissioner within one hundred twenty (120) days of
the examination and may file the results with the United
States securities and exchange commission as its rules may
provide. Material discrepancies in an examination shall be
reported to the commissioner within one (1) day. The
commissioner shall review examination results upon receipt
within a reasonable time and during any regular examination
conducted under W.S. 13-3-702.
(d) Digital assets held in custody under this section
are not depository liabilities or assets of the bank. A bank,
or a subsidiary, may register as an investment adviser,
investment company or broker dealer as necessary. A bank shall
maintain control over a digital asset while in custody. A
customer shall elect, pursuant to a written agreement with
the bank, one (1) of the following relationships for each
digital asset held in custody:
(i) Custody under a bailment as a nonfungible or
fungible asset. Assets held under this paragraph shall be
strictly segregated from other assets; or
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2019 GENERAL SESSION
(ii) Custody under a bailment pursuant to
subsection (e) of this section.
(e) If a customer makes an election under paragraph
(d)(ii) of this section, the bank may, based only on customer
instructions, undertake transactions with the digital asset.
A bank maintains control pursuant to subsection (d) of this
section by entering into an agreement with the counterparty
to a transaction which contains a time for return of the
asset. The bank shall not be liable for any loss suffered
with respect to a transaction under this subsection, except
for liability consistent with fiduciary and trust powers as
a custodian under this section.
(f) A bank and a customer shall agree in writing
regarding the source code version the bank will use for each
digital asset, and the treatment of each asset under the
Uniform Commercial Code, title 34.1, Wyoming statutes if
necessary. Any ambiguity under this subsection shall be
resolved in favor of the customer.
(g) A bank shall provide clear, written notice to each
customer, and require written acknowledgement, of the
following:
(i) Prior to the implementation of any updates,
material source code updates relating to digital assets held
in custody, except in emergencies which may include security
vulnerabilities;
(ii) The heightened risk of loss from transactions
under subsection (e) of this section;
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2019 GENERAL SESSION
(iii) That some risk of loss as a pro rata creditor
exists as the result of custody as a fungible asset or custody
under paragraph (d)(ii) of this section;
(iv) That custody under paragraph (d)(ii) of this
section may not result in the digital assets of the customer
being strictly segregated from other customer assets; and
(v) That the bank is not liable for losses
suffered under subsection (e) of this section, except for
liability consistent with fiduciary and trust powers as a
custodian under this section.
(h) A bank and a customer shall agree in writing to a
time period within which the bank must return a digital asset
held in custody under this section. If a customer makes an
election under paragraph (d)(ii) of this section, the bank
and the customer may also agree in writing to the form in
which the digital asset shall be returned.
(j) All ancillary or subsidiary proceeds relating to
digital assets held in custody under this section shall accrue
to the benefit of the customer, except as specified by a
written agreement with the customer. The bank may elect not
to collect certain ancillary or subsidiary proceeds, as long
as the election is disclosed in writing. A customer who makes
an election under paragraph (d)(i) of this section may
withdraw the digital asset in a form that permits the
collection of the ancillary or subsidiary proceeds.
(k) A bank shall not authorize or permit
rehypothecation of digital assets under this section. The
bank shall not engage in any activity to use or exercise
discretionary authority relating to a digital asset except
based on customer instructions.
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2019 GENERAL SESSION
(m) A bank shall not take any action under this section
which would likely impair the solvency or the safety and
soundness of the bank, as determined by the commissioner after
considering the nature of custodial services customary in the
banking industry.
(n) Banks are not subject to the annual report license
tax levied under W.S. 17-16-1630. In lieu of this tax and to
offset the costs of supervision and administration of this
section, a bank which provides custodial services under this
section shall pay a supervision fee equal to two-tenths of
one mill on the dollar ($.0002) relating to assets held in
custody under this section as of December 31 of each year,
with payment of the supervision fee made on or before the
following January 31. The supervision fee shall be deposited
by the commissioner into the financial institutions
administration account and may be expended for any purpose
authorized for that account. Banks providing custodial
services outside of this section shall not be required to pay
this supervision fee.
(o) The commissioner may adopt rules to implement this
section.
(p) As used in this section:
(i) "Bank" has the meaning ascribed to it in W.S.
13-1-101(a)(i);
(ii) "Commissioner" means the banking
commissioner;
(iii) "Custodial services" means the safekeeping
and management of customer currency and digital assets
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2019 GENERAL SESSION
through the exercise of fiduciary and trust powers under this
section as a custodian, and includes fund administration and
the execution of customer instructions.
34-29-105. Jurisdiction of courts.
The courts of Wyoming shall have jurisdiction to hear claims
in both law and equity relating to digital assets, including
those arising from this chapter and the Uniform Commercial
Code, title 34.1, Wyoming statutes.
34.1-1-210. Applicability of other sections.
Chapter 29, title 34, Wyoming statutes shall apply to this
title.
Section 2. W.S. 13-2-101(a)(ix) is amended to read:
13-2-101. Generally.
(a) Each bank may:
(ix) Operate a trust department and exercise all
powers enumerated by W.S. 13-5-101(b) and 34—29-104;
Section 3. If 2019 House Bill 0074 is enacted into law,
the entity created by 2019 House Bill 0074 may exercise all
powers set forth in W.S. 34-29-104 as created by this act.
Section 4. The department of audit is authorized two
(2) additional full-time employees for the purposes of this
act. There is appropriated one hundred seventy-five thousand
six hundred four dollars ($175,604.00) of special revenue
funds from the financial institutions administration account
to the department of audit. This appropriation shall be for
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2019 GENERAL SESSION
the period beginning with the effective date of this act and
ending June 30, 2020.
Section 5. This act is effective July 1, 2019.
(END)
Speaker of the House President of the Senate
Governor
TIME APPROVED: _________
DATE APPROVED: _________
I hereby certify that this act originated in the Senate.
Chief Clerk
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