Blockchain Legal Resource

The Wyoming Division of Banking issued a No-Action Letter (NAL) in October 2020 in response to a request from a Wyoming-chartered public trust company seeking the Division of Banking’s position on the ability of the company to custody digital assets as well as hold itself out as a “qualified custodian.” The NAL prompted the Staff of the Securities and Exchange Commission to issue a public statement seeking public comment on matters concerning the definition of “qualified custodian” under the Investment Advisers Act of 1940 (the “Advisers Act”) and Rule 206(4)-2 thereunder (the “Custody Rule”).

Wyoming recently awarded its second special-purpose depository institution (SPDI) charter to Avanti Bank. Kraken was the first institution to receive the newly created SPDI charter in September. As Wyoming had likely hoped when it passed a flurry of blockchain legislation, it appears that it is starting to take hold as a digital-asset-friendly banking state. The state has now chartered two new banks in less than two months; before September, the last newly chartered bank in Wyoming was approved over a decade ago.

On Wednesday, September 16, 2020, the cryptocurrency exchange Kraken Financial became the first crypto company to obtain a bank charter. The Wyoming Division of Banking approved Kraken’s application for a special-purpose depository institution (SPDI) charter, which is a new type of bank charter that Wyoming specifically designed for crypto businesses. This makes Kraken the first de novo bank chartered in the state since 2006.

A vigorous competition among the states to regulate digital assets has begun to develop. Some states, such as New York, have adopted regulations that take a very proscriptive approach to regulation in the interest of consumer protection. States like Wyoming, on the other hand, see an opportunity to stimulate the local economy and take a far more permissive view of digital assets. Two bills now under consideration by the Wyoming Legislature seek to further expand the digital asset economy in the state.