Digital assets-existing law. | 19LSO-0608, 1.1 |
CORRECTED COPY
FISCAL NOTE
The non-administrative fiscal impact is not determinable due to insufficient time to complete the fiscal note process.
NOTICE-AGENCY ESTIMATE OF ADMINISTRATIVE IMPACT REQUESTED
This bill has administrative impact that appears to increase duties or responsibilities of one or more state agencies and may impact agency spending or staffing requirements. As introduced, the bill does not modify any state agency budget or current personnel authorizations. The following state agencies will be asked to provide their estimate of the administrative fiscal impact prior to the first committee meeting held to consider the bill:
Department of Audit |
Prepared by: Dean Temte, LSO Phone: 777-7881
SF0125
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:
(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;
(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 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 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.
(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
(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
(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;
(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.
(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 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 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)
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Speaker of the House |
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| President of the Senate |
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| Governor |
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| TIME APPROVED: _________ |
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| DATE APPROVED: _________ |
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I hereby certify that this act originated in the Senate.
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Chief Clerk |
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SF0125 | Digital assets-existing law. |
Sponsored By: Senator(s) Nethercott, Driskill, Perkins and Rothfuss and Representative(s) Harshman, Lindholm, Loucks, Olsen and Wilson
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.
1/18/2019 Bill Number Assigned
1/22/2019 S Received for Introduction
1/23/2019 S Introduced and Referred to S01 - Judiciary
1/28/2019 S01 - Judiciary:Recommend Do Pass 5-0-0-0-0
ROLL CALL
Ayes: Senator(s) Anselmi-Dalton, Boner, Kost, Nethercott, Von Flatern
Ayes 5 Nays 0 Excused 0 Absent 0 Conflicts 0
1/28/2019 S Placed on General File
SF0125SW001/ADOPTED
Page 16-line 9 Delete \"13-2-104 and\"; after \"13-5-101(b)\" insert \"and 34-29-104\". NETHERCOTT
1/29/2019 S COW:Passed
1/30/2019 S 2nd Reading:Passed
1/31/2019 S 3rd Reading:Passed 28-1-1-0-0
ROLL CALL
Ayes: Senator(s) Agar, Anderson, Anselmi-Dalton, Baldwin, Bebout, Biteman, Boner, Bouchard, Case, Coe, Dockstader, Driskill, Ellis, Gierau, Hicks, Hutchings, James, Kinskey, Kost, Landen, Moniz, Pappas, Perkins, Rothfuss, Schuler, Scott, Von Flatern, Wasserburger
Nays: Senator Steinmetz
Excused: Senator Nethercott
Ayes 28 Nays 1 Excused 1 Absent 0 Conflicts 0
2/1/2019 H Received for Introduction
2/6/2019 H Introduced and Referred to H07 - Corporations
2/7/2019 H07 - Corporations:Recommend Amend and Do Pass 6-3-0-0-0
ROLL CALL
Ayes: Representative(s) Blackburn, Clifford, Duncan, Eyre, Furphy, Lindholm
Nays: Representative(s) Clausen, Clem, Edwards
Ayes 6 Nays 3 Excused 0 Absent 0 Conflicts 0
2/7/2019 H Placed on General File
2/7/2019 H COW:Rerefer to H02 - Appropriations
2/11/2019 H02 - Appropriations:Recommend Do Pass 7-0-0-0-0
ROLL CALL
Ayes: Representative(s) Kinner, Larsen, Nicholas, Olsen, Schwartz, Sommers, Walters
Ayes 7 Nays 0 Excused 0 Absent 0 Conflicts 0
2/11/2019 H Placed on General File
SF0125HS001/ADOPTED (TO ENGROSSED COPY)
Page 1-line 9 After \"assets;\" insert \"authorizing a supervision fee; making an appropriation; authorizing positions;\".
Page 3-lines 1 through 6 Delete entirely and insert:
\"(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;\".
Page 8-line 8 After \"data\" insert \", or any substantially similar analogue, which is\".
Page 8-line 21 Delete \"for digital\".
Page 8-line 22 Delete \"assets\".
Page 9-line 3 Delete \"for digital\".
Page 9-line 4 Delete \"assets\".
Page 14-line 3 After \"writing\" insert \".\"; delete \"and a customer\" and insert \"A customer who makes an election under paragraph (d)(i) of this section\".
Page 14-after line 16 Insert:
\"(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.\".
Page 14-line 18 Delete \"(n)\" and insert \"(o)\".
Page 14-line 21 Delete \"(o)\" and insert \"(p)\".
Page 16-after line 13 Insert:
\"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 the period beginning with the effective date of this act and ending June 30, 2020.\".
Page 16-line 15 Delete \"4.\" and insert \"5.\". LINDHOLM, CHAIRMAN
2/12/2019 H COW:Passed
SF0125H2001/ADOPTED (TO ENGROSSED COPY)
Page 1-line 6 Delete \"directed\".
Page 5-line 19 After \"intangibles\" insert \"or any other provision of law\".
Page 6-lines 18 through 21 Delete entirely and insert: \"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.\".
Page 7-lines 2 through 4 Delete entirely and insert:
\"(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:\".
Page 7-line 7 After \"exclusive\" insert \"legal\".
Page 7-line 10 After \"arrangement\" insert \"authorized by the secured party\".
Page 7-line 13 After \"exclusive\" insert \"legal\".
Page 8-after line 17 Insert:
\"(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.\".
Page 12-line 2 Delete \"directed\".
Page 13-line 12 Delete \"directed\".
Page 14-line 9 Delete \"materially\".
Page 14-line 10 Delete \"affect\" and insert \"exercise discretionary authority relating to\".
Page 15-line 10 Delete \"directed\". LINDHOLM
2/13/2019 H 2nd Reading:Passed
2/14/2019 H 3rd Reading:Passed 54-2-4-0-0
ROLL CALL
Ayes: Representative(s) Barlow, Blackburn, Blake, Brown, Burkhart, Burlingame, Clausen, Connolly, Crank, Dayton-Selman, Duncan, Eklund, Eyre, Flitner, Freeman, Furphy, Gray, Haley, Hallinan, Harshman, Henderson, Hunt, Jennings, Kinner, Kirkbride, Larsen, Laursen, Lindholm, Loucks, MacGuire, Miller, Newsome, Nicholas, Obermueller, Olsen, Paxton, Pelkey, Piiparinen, Pownall, Roscoe, Salazar, Schwartz, Simpson, Sommers, Stith, Styvar, Sweeney, Tass, Washut, Western, Wilson, Winter, Yin, Zwonitzer
Nays: Representative(s) Clem, Edwards
Excused: Representative(s) Clifford, Greear, Northrup, Walters
Ayes 54 Nays 2 Excused 4 Absent 0 Conflicts 0
2/14/2019 S Received for Concurrence
2/15/2019 S Concur:Passed 29-0-1-0-0
ROLL CALL
Ayes: Senator(s) Agar, Anderson, Anselmi-Dalton, Baldwin, Bebout, Biteman, Boner, Bouchard, Case, Coe, Dockstader, Driskill, Ellis, Gierau, Hicks, Hutchings, James, Kinskey, Kost, Landen, Moniz, Nethercott, Pappas, Perkins, Rothfuss, Schuler, Scott, Steinmetz, Von Flatern
Excused: Senator Wasserburger
Ayes 29 Nays 0 Excused 1 Absent 0 Conflicts 0
2/15/2019 Assigned Number SEA No. 0039
2/19/2019 S President Signed SEA No. 0039
2/20/2019 H Speaker Signed SEA No. 0039
2/26/2019 Governor Signed SEA No. 0039
2/26/2019 Assigned Chapter Number 91
Chapter No. 91 Session Laws of Wyoming 2019
Bill No.: SF0125 Effective: July 1, 2019
LSO No.: 19LSO-0608
Enrolled Act No.: SEA No. 0039
Chapter No.: 91
Prime Sponsor: Nethercott
Catch Title: Digital assets-existing law.
Subject: Nature of digital assets; Uniform Commercial Code; security interests; qualified custodians; custodial services; blockchain.
Summary/Major Elements:
Comments:
The above summary is not an official publication of the Wyoming Legislature and is not an official statement of legislative intent. While the Legislative Service Office endeavored to provide accurate information in this summary, it should not be relied upon as a comprehensive abstract of the bill. |