Individualism and the Crypto Rush Out West

Written by
Trevor Koverko
Published on
February 4, 2022

Wyoming, with its individualism and libertarian leanings, has an economy founded on commodities: from cattle to oil to coal and now, the Equality State is focusing on cryptocurrency.

According to Bloomberg, Wyoming is aiming to rebrand itself as the “most crypto-friendly state in the U.S.”

In that move, the state has paved the way for limited liability corporation laws to be “friendlier” to blockchain companies thanks to sweeping legislation from Governor Matt Mead (R) .

Enshrining open blockchain tokens or utility tokens as an asset class was a major part of the legislative moves. Further, the legislation exempts cryptocurrency (which is taxed by the IRS as physical property) from property taxes.

This, in turn, has led crypto/blockchain companies to seek Wyoming’s greener pastures.

David Pope, executive director of Wyoming Blockchain Coalition, the organisation that lobbied for such legislation, describes this development as full of possibilities and “one of the most exciting things I have seen in a decade.”

He spoke to Wyoming gaining in competitiveness with Delaware, famously known for friendliness toward LLCs.

Delaware has certainly positioned itself as a leader of industry.

“As of today, 67.8% of Fortune 500 companies are incorporated in Delaware. This means that Delaware, despite having less than one-third of one percent of the US population, is by far the primary place of incorporation for the most important businesses in the world,” according to Pierluigi Matera, professor of comparative law at the Link Campus University of Rome, professor of business and corporate law at LUISS, and visiting fellow at Wolfson College, Cambridge. Not only is Delaware in a position of dominance, but the state has exerted legal precedence and dominance for over a century, he explained.

All corporate governance disputes for those nearly 70% of Fortune 500 companies are adjudicated using Delaware law.

“As a consequence, Delaware courts adjudicate so many cases on corporations that they have developed a body of legal precedents,” he explained. These outstrip any other jurisdiction, and other courts are influenced by the precedents established in Delaware, even when Delaware corporate law does not apply.

Matera pointed out that there could be several reasons for the rise and staying power of Delaware, which fall under the categories of credible commitment theory and network theory.

“According to the former, investors rely upon Delaware commitment towards the business community; the network theory emphasises how Delaware is profiting from the network externalities of the position achieved. The credible commitment theory and the network theory sometimes overlap and combine,” he wrote. “Both predict that Delaware is hard to dethrone.”

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