Chris Rothfuss, the Wyoming senate minority leader, was working on a task force related to digital information privacy in 2015, when a constituent raised concerns about wanting to purchase cryptocurrency through Coinbase.

The exchange wasn’t operating in Wyoming at the time, with the division of banking interpreting the Wyoming Money Transmitters Act in such a way that it required effectively double funding of any cryptocurrency transaction. 

“This was a fundamental misunderstanding of how the technology operated in the context of the Money Transmitters Act,” said Rothfuss, who is also chair of the Select Committee on Blockchain, Financial Technology and Digital Innovation Technology. The mismatch was the inspiration for the permanent select committee, he said, which was assembled in 2019. 

Wyoming has always been a live-and-let-live state with a small government, and was the first to pioneer digital-asset legislation. While many state legislatures are conservative when creating new laws, Wyoming isn’t afraid to be the first mover. In 1977 it created the nation’s first limited liability company (LLC) corporate structure, which the successful DAO supplement was based on. Decentralized Unincorporated Nonprofit Association Act (DUNA) takes this one step further, utilizing an unincorporated nonprofit association instead of an LLC. 

DUNA, which creates a nonprofit corporate structure to allow nonprofit DAOs to engage in profit-making activities, goes into effect on July 1. 

Rothfuss said state politicians have made sure to bring together key stakeholders and are ready to refine the law in the next legislative session if necessary. 

Initial conversations regarding DUNA took place in late 2022 and it was put on a priority list for 2023. The select committee wanted to have a draft bill by their 2024 legislative session and the legislation was developed between sessions through the meeting process and voted on in the third select committee meeting. 

Existing Wyoming legislation made the DUNA structure easier to implement, Rothfuss said. “The Corporate Transparency Act effectively governs our DAO LLC since they’re for-profit, so there will be significant disclosure requirements which might be hard to manage. Whereas it does not have the same reporting requirements for an unincorporated nonprofit association,” he said. 

The select committee started as a blockchain task force after Wyoming recognized it could create regulations to enable the advent of digital assets by creating statutory and regulatory clarity that didn’t exist elsewhere. 

Many of Wyoming’s key crypto advocates are involved in the select committee, such as Custodia Bank Chief Executive Officer Caitlin Long and Chris Land, general counsel to the U.S. Senator for Wyoming Cynthia Lummis. 

What’s unique about Wyoming’s select committee is the focus on stakeholder feedback. 

Read more: Wyoming's New Law to Recognize DAOs as Legal Entities is Just the Start, Lummis Says

“We work hard to really listen, rather than just creating regulations that are unnecessary or burdensome,” Rothfuss said. “We look at it more like software development than the typical sausage making of statute, because we’re in an iterative cycle where we have a feature set that we lock in. We come back and add new features, and do ‘bug fixes’ with the next release.”

The committee is in constant contact with Senator Lummis’s office to ensure what they’re working on at the federal level reflects what we’ve been working on at the state level, and vice versa, Rothfuss said. 

He hopes to get the Wyoming Stable Token Act across the finish line this year and revisit previous legislation. Artificial intelligence, digital identity and privacy are key topics on the committee’s agenda.

lead image: Chris Rothfuss