Caitlin Long  🔑

20/ So the proposed bill enables the first crop of institutional-quality digital asset custodians. Investors get true protection. Custodians get optimal license regime + legal clarity. But there’s more. Customers of a #Wyoming enhanced digital asset custodian aren’t forced into a

21/ a debtor/creditor relationship—customer can elect a bailment (a common-law term where you still hold title to your coins even tho you give control to the custodian). Best example of a bailment=valet parking (you retain title to your car but give up control). How does this

22/ jive with #NotYourKeysNotYourCoins? It doesn’t, clearly. It’s inferior to holding your own private keys. But it addresses the reality that big institutional investors & investment advisers are required by law to hold assets in a 3rd party custodian. All 3rd parties=

23/ security risks, but until Congress changes #SEC’s #CustodyRule it’s the law of the land. 2nd best is you retain title to your coins but give control to a #Wyoming custodian via a non-fungible #bailment, where custodian owes you a fiduciary duty of care. 3rd best =

24/ you choose to allow your custodian to pool your coins in an omnibus account & you participate in gains from financing/staking, etc. But if you do that & your custodian fails, you won’t be bailed out. All fair, all clearly disclosed & acknowledged by contract. No surprises!

25/ So, that’s custody. Now let’s move to legal clarity. Commercial law in the US is defined by state laws called UCC. #Wyoming isn’t changing its UCC but is adding an addendum to classify UCC treatment of digital assets. This ties back to the #SEC

26/ concern about the wind-up of an insolvent financial institution, bc bankruptcy judges look to state law to determine the nature & quality of an asset--& if state law isn’t clear, no one knows how a bankruptcy judge will handle it. One wonders why no other state has clarified

27/ this yet—it’s not rocket science & #Wyoming isn’t inventing anything new (except a new def'n of control that reflects how the tech actually works). Wyoming is giving a clear roadmap to lawyers & judges that REFLECTS THE TECHNOLOGY. Plus it allows a #smartcontract to control

28/ a digital asset. Most lawyers will appreciate this & technologists shld see that these rules reflect (enable!!) the peer-to-peer reality of #blockchain technology. We've been deep in the weeds on these topics & studied an alternative proposal for digital assets under UCC that

29/ wld require owner to keep digital assets at an intermediary--sorry that's just WRONG! This is fundamentally peer-to-peer technology & Wyoming's proposed law affirms this (you can still choose to use an intermediary, but aren't forced to do so to gain legal recognition of your

30/ PROPERTY RIGHTS in your digital assets). Had other states enacted that requirement (to own coins via an intermediary) before WY came in for the BIG SAVE, it would've been a disaster for #blockchain IMHO. That proposal would have turned direct ownership into indirect

31/ ownership & turned a direct PROPERTY RIGHT into an IOU. That’s how securities work—you don’t directly own your stocks anymore; you own an IOU from your broker/dealer via layers of intermediaries. But that legal regime is the cause of many probs in securities (eg, Dole Food

33/ Leadership in #Wyoming gets this--#Wyoming has a long tradition of respecting PROPERTY RIGHTS. If this bill passes, Wyoming bank charters become more valuable & I will continue to volunteer to make this win-win for the State of Wyoming and the best #blockchain companies!

34/ I’m so grateful to the small army of people who provided feedback on bill drafts—we landed in a great place for #Wyoming & #blockchain. Special shout-outs to @TraceMayer, @SteveLupien, @asset_trade & attorneys at @DLxLawLLP, @lex_node, @ConsenSys, @TheBKP_Official

35/ @MilbankLaw, @sullcrom, @ColumbiaLaw's Prof Ronald Mann & @CardozoLaw's Prof Jeanne Schroeder + many parties looking at setting up #Wyoming digital-asset custodians—you won’t agree w/ everything in the bill but prob w/ most. EXTRA THANKS to Wyoming Legislative Service Office

36/ for doing an amazing research & drafting job! But BIGGEST thanks go to #Wyoming's legislators, who last year decided to lead the world in #blockchain. It has been good to Wyoming so far, & vice versa. If this bill becomes law it will be momentous for both—JOBS & REVENUES

37/ for #Wyoming; for #blockchain sector, superior regulatory path to #QualifiedCustodian of digital assets. #WinWin Digital asset industry is $125 billion today. Securities custody industry today is $114 trillion but growing slice of that $114 trn of securities will be issued on

38/ #blockchains (#WorldBank recently issued A$110 million bond in digital-asset form). A chunk of that $114 trillion will migrate from trad. custodians to digital-asset custodians, & #Wyoming should dominate--remember, only a WY custodian can cleanse old liens after 2 years!

39/ But there’s more--diff bills also propose to authorize a special purpose depository institution, fintech sandbox, Sec of State integrating w/ a #blockchain, tokenized securities + a chancery court. Plus the Governor & Sec of State gave shout-outs to #blockchain in inaugural