, 12 tweets, 28 min read Read on Twitter
@DamianGawryluk You’re very warm...keep going! There are profound implications for #crypto custodians from footnote 13 of the SEC’s new guidance...I’ll be back with more later 🤠🤠🤠... @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley 1/ OK here's what it means. The SEC's new guidance would have been a bummer for the #crypto custody industry were it not for #Wyoming's new #SPDI law, bc there's precisely one--only one--type of bank that satisfies the SEC's key rqmt w/o tripping over other regulatory landmines.
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley 2/ #Wyoming designed the #SPDI law to thread this v precise needle--to be a bank when it NEEDS to be (eg, to satisfy good control location) but not to be a bank when it doesn't want to be (eg, to avoid tripping bank holding co status). The impact? The #crypto custodians that...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley 3/ ...set up trust companies (NY, SC, NV) will prob end up converting to a #Wyoming #SPDI so they can meet certain #SEC rqmts simply by nature of being a bank (such as good control location, among others). We knew the #SEC has a preference for banks over trust cos as #crypto...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley 4/ ...custodians precisely bc trust cos are excluded from key parts of the Exchange Act. But #Wyoming also knew federal bank regulators weren't likely to approve any trad banks to become #crypto custodians anytime soon--so we had a v fine needle to thread. IT WAS SO AWESOME TO...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley 5/ ...SEE IT IN WRITING FROM THE SEC YESTERDAY in footnote 13! 🤠👊And it was particularly awesome that the SEC's guidance came out just before I was meeting w/ @GovernorGordon & the scouting team of a #crypto co that came to #Wyoming bc it has already figured all this out...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley @GovernorGordon 6/ ...To manage expectations, applying for a new #bank charter is a long process & #Wyoming #SPDI applications don't even open until Oct 1--but, thanks to the hard work of #Wyoming (esp the unbelievably talented atty who did the needle threading--Chris Land, now general counsel..
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley @GovernorGordon 7/ ...of the Wyoming Banking Division), the #crypto custody industry isn't stuck in an impossible regulatory quandary bc it has a workable solution via #Wyoming law! While the default solution for #crypto custody has been to apply for a trust charter in one state & backfill...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley @GovernorGordon 8/ ...with state-by-state money transmitter licenses, the #Wyoming #SPDI is simply better--it's a state-chartered bank (& nearly all states recognize other states' state-chartered banks), plus it checks many of the SEC's boxes under the Custody Rule & Customer Protection Rule...
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley @GovernorGordon 9/ ...that trust companies simply aren't able to check bc they're excluded from key parts of the Exchange Act. And a #Wyoming #SPDI isn't a bank for BHC purposes (bc it can't lend). Here are the key provisions w/ emphasis added:
@DamianGawryluk @propelforward @NYcryptolawyer @josh_blockchain @AndreaTinianow @AnnetteNazareth @stephendpalley @GovernorGordon 11/ ...here's the definition of "bank" under the Exchange Act--state-chartered banks work here, but trust cos don't. So...#Wyoming is where #digitalsecurities custodians (& #crypto custodians more broadly) are likely to set up shop, using our new #SPDI law. Come check us out! 🤠
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