A16z Annual Cryptocurrency Report Three Major Cryptocurrency Regulatory Changes in the United States This Year

A16z recently released its 2024 Crypto Annual Report, which highlighted cryptocurrency and regulatory policies as hot topics during the U.S. election. The following report provides an extended analysis of the significant changes in cryptocurrency regulation by the U.S. government.

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Bitcoin and Ether ETFs officially recognized by the government
Wyoming passes DUNA Act, opening up new tax-saving opportunities
FIT 21 Act brings transparency to political donations
On January 10th of this year, the U.S. SEC officially approved the Bitcoin ETP (Exchange-Traded Products), which is the registered name for ETFs. On July 24th, the Ether ETP was also issued. The issuance of ETPs did not immediately stimulate the prices of BTC and ETH. However, it signifies that virtual currencies and digital assets have been recognized by mainstream institutions and can be legally invested under government regulations.

Wyoming Governor Mark Gordon signed the DUNA Act on March 7th.

DUNA
In addition to demonstrating Wyoming’s support for blockchain startups, the passage of the DUNA Act provides a solution for the challenges faced by decentralized organizations and even reinterprets the innovative structure of DAOs.

The new structure of DAOs, called “Decentralized Unincorporated Nonprofit Associations” (DUNA), allows DAOs to maintain their decentralized characteristics within the framework of legal compliance. DAOs have been seen as a new variant between corporations and nonprofit organizations. Interestingly, the DUNA Act includes an important provision: DUNA can be converted into a limited liability company and can acquire, hold, and transfer real estate under the name of DUNA, while also being able to generate profits while maintaining its identity as a “nonprofit organization.”

As early as 2017, the SEC recognized that although DAOs are decentralized organizations, they cannot be exempted from being registered securities. The SEC believes that issuing and registering securities (or shares) in the United States, regardless of whether the subscription is in U.S. dollars or virtual currencies, should be subject to U.S. securities laws.

The Commodity Futures Trading Commission (CFTC) holds the same view as the SEC regarding DAOs. The CFTC believes that DAOs should not be regarded as legal entities but as associations of individuals. DUNA, through the form of DAO, transforms into a non-legal and nonprofit organization.

Wyoming
Wyoming has mainly supported the Republican Party and former President Trump over the years. This state, with only 560,000 residents, is home to many hidden billionaires. There have been many discussions online about why billionaires are attracted to this barren land that still remains in the era of the Wild West. The wealthy individuals in Wyoming are not locals but people who have moved here from other places. The state is full of desolate towns, with no one around except for barren mountains and open land where people can ski in the winter. Since the start of the pandemic, many people who have moved from New York and Los Angeles have heavily invested in real estate here.

Wyoming Official Website
It is said to be the most business-friendly state in the United States, where almost no taxes need to be paid, including corporate tax, personal tax, income tax, property tax, value-added tax, storage tax, franchise tax, and more. Recently, real estate in Wyoming has been hyped to new highs. The average annual income of residents in Teton County, Wyoming, is $100,000, but the average registered housing price is as high as $7 million. At this moment, the investment clauses related to real estate transactions passed in the DUNA Act are particularly intriguing.

According to Wyoming’s blockchain report, since 2016, the state legislature has enthusiastically embraced blockchain and cryptocurrency and has been committed to promoting support for blockchain. It was the first state to support the Token Taxonomy Act.

Virtual currency mining company Elite Mining Inc. relocated to Cheyenne, the capital of Wyoming, in 2021. Elite Mining is reportedly engaged in renewable energy mining.

Interestingly, according to the Google Trends report compiled by A16z, the number of searches by Wyoming residents for Bitcoin and Ethereum has not increased but has actually decreased. This suggests that Wyoming residents seem to have already understood the principles of Bitcoin. As the United States operates under the system of state autonomy, Wyoming may become a popular region for registering and incorporating DUNAs next year.

In May 2024, both the Democratic and Republican parties supported the passage of the FIT 21 (21st Century Financial Innovation and Technology Act) proposal. The main purpose of this act is to provide clear and transparent regulation for cryptocurrencies, protecting entrepreneurs and investors from financial harm and preventing future sanctions and lawsuits from the SEC.

The FIT 21 Act, passed before the U.S. presidential election, has another important significance. According to Reuters, recent data indicates that half of the political donations from companies to political parties come from cryptocurrency companies. The U.S. House of Representatives passed the proposal on May 22nd with support from cryptocurrency companies such as Coinbase, The Block, and Digital Currency Group. This early transparency of political donations aims to reduce future scrutiny from the SEC and CFTC after the election.

21st Century FIT Act
A16z 2024 Crypto Report
DAO
Decentralized Unincorporated Nonprofit Associations
DUNA
Elite Mining
Wyoming

Additional Reading
Wyoming Stabilized Token Authority is Hiring an Executive Director, Coinbase is Also Recruiting
Opinion | Wyoming’s DAO Act Aims to Create a “DAO Headquarters,” but It Is Bound to be Disappointed