The blockchain space and cryptocurrencies are ever-evolving, and so are the laws and rules surrounding them.
This is still a fairly new industry in its infancy, and throughout the following years, we will likely see a lot more laws get into effect throughout numerous U.S. states, as well as on a global level.
One of the latest bills surrounds the U.S. state known as Wyoming, aiming to provide a much higher level of control and privacy to its citizens.
Specifically, Wyoming's House of Representatives passed a bill that prohibits the forced disclosure of private cryptocurrency keys by U.S. state courts.
The goal of this bill is to essentially protect citizens from having to disclose their private keys. However, there is a singular exception, and today, we will be exploring what this bill actually implicates and how it can affect the future of cryptocurrency investors in the region.
Private Keys and Their Role In The Blockchain Space
In the most simple terms, a private key is utilized to verify cryptocurrency transactions and is a requirement for the owner of the cryptocurrencies to verify and prove that they have ownership over the assets within a blockchain address.
When looked at from a technical standpoint, it is an alphanumeric code that is utilized in cryptocurrency in a similar way as a password would be used.
Once someone gains access to the private key, they can get access to the address within a blockchain and have control over it.
They can then do whatever they want to with the cryptocurrencies connected to that address, which makes it the most important key a cryptocurrency trader or investor needs to protect.
More Details Surrounding The Bill Titled “Production of private keys; prohibition.”
According to the official bill, the following statement is now valid:
"No person shall be compelled to produce a private key or make a private key known to any other person in any civil, criminal, administrative, legislative or other proceeding in this state that relates to a digital asset, digital identity or other interest or right to which the private key provides access unless a public key is unavailable or unable to disclose the requisite information with respect to the digital asset, digital identity or other interest or right."
The bill was passed by a vote of 41-13 in the Wyoming House of Representatives on February 15, 2023, after passing 31-0 in the Wyoming Senate.
If the bill gets approved by Wyoming Governor Mark Gordon, the law will come into effect on July 1, 2023.
Moreover, the bill also notes that these rules are not meant to disrupt any lawful proceeding which requires people to disclose the ownership or transfer of crypto.
Keep in mind, however, that it does not specify that it would be only for Bitcoin (BTC) keys, and it could apply the same to any private keys utilized as decentralized identities or any other use cases.
This isn't the only law that Wyoming has brought forward thus far, as the U.S. state also brought forward numerous other laws, such as one for a blockchain filing system and a legal framework for decentralized autonomous organizations (DAO) that govern decentralized finance.
These laws can be attributed to Senator Cynthia Lummis' ardent support for Bitcoin and for pushing forward regulation within the country.
As for the exception, the only exception involves when a public key is unavailable or is unable to disclose the details of a specific digital asset, digital identity, or other interests and rights.
The act, however, states that the new law will not bar anyone from being compelled "to produce, sell, transfer, convey or disclose a digital asset, digital identity or other interest or right" that a private key could provide access to.
It does not prevent anyone from being compelled to “disclose information about the digital asset, digital identity or other interest or right.”
The law, known as W.S. 34-29-107, will be officially titled "Production of private keys; prohibition." The private key legislation bill comes after being worked on since September 2019.
Protecting Your Cryptocurrency Investment Further
This law can be seen as positive when looked at from the perspective of individual cryptocurrency investors as well as traders.
However, traders can also protect themselves further by gaining ownership over a hardware wallet or splitting their balance among numerous wallets instead of storing all of their cryptocurrencies within a single location.
Whenever an investor or trader begins their procedure, they will also need a strategy, and withdrawing their cryptocurrencies to a private wallet from an exchange, automatically can be an essential aspect of keeping their balance secure, a procedure that can be done through ZenDCA.
This way, even if they forget to make withdrawals, the automation tool can provide them with access to set up schedules for withdrawing cryptocurrencies and, as a direct result, keep the cryptocurrencies as secure as possible.
In the future, more U.S. states could potentially adapt this bill or introduce new ones that take the security and privacy of citizens even further. The goal of blockchain technology and decentralization is to enable users to maintain full control over their cryptocurrency balance and not let it fall into control by a third party, central authority.
Through this bill, they will essentially remain in full control over their cryptocurrencies and will not need to provide the private key to anyone, which is the initial goal and mission of blockchain technology and cryptocurrencies.