Wyoming Moves to Allow Tokenization of Corporate Stocks

The Wyoming legislature is considering a bill that would allow corporations to issue tokenized stock certificates in place of paper-based stock certificates. The bill, which has broad support and is almost certain to pass, would permit the storing, issuing, and transferring of corporate securities on a blockchain or “other secure, auditable database” that consists of a “digital ledger or database which is chronological, consensus-based, decentralized and mathematically verified in nature.”

State House of Representatives member Jared Olsen (R) and State Senator Chris Rothfuss (D) spearheaded the bill, Wyoming Bill 185, HB0185 – Corporate stock-certificate tokens, that, if passed, will become law on July 1, 2019.

The bill would expand the meaning of several legal terms already used within the state to describe a corporate stock. Those existing terms would, upon passage of the bill, include within their definitions the concept of “certificate tokens”: “Share certificate, share, stock, share of stock or words of similar import shall be construed to include a certificate token.” The bill states that 100% of a corporation's stock can be legally tokenized: “The articles of incorporation or bylaws of a corporation may specify that all or a portion of the shares of the corporation may be represented by share certificates in the form of certificate tokens.”

The bill defines the term “network signature” as “a string of alphanumeric characters that, when broadcasted by a shareholder person to the data address's corresponding distributed or other electronic network or database, provides reasonable assurances to a corporation recipient that the shareholder broadcasting person has knowledge or possession of the private key uniquely associated with the data address.”

With “House Bill 185 – Corporate stock-certificate tokens” and other recently enacted legislation, Wyoming continues to prepare fertile soil for blockchain technology entrepreneurship and security token innovation within the state.  A statement issued by the State of Wyoming Legislature’s “Blockchain Task Force” in October 2018 sums up the state's vision for positioning itself as a hotbed of blockchain innovation, “The Blockchain Task Force will consider draft bills regarding financial institutions, digital assets, business entities, a financial technology sandbox, real property records, utility agreements and data trust services.”