State Affairs: Wisconsin bill would legalize crypto staking, joining a majority of states
Wisconsin would join nearly every other state in legalizing cryptocurrency staking, under a bill introduced this week.
Rep. Adam Neylon, R-Pewaukee, introduced Assembly Bill 471, the Crypto Clarity and Innovation Act. The bill seeks to define key cryptocurrency terms, establish guardrails to prevent political subdivisions — such as municipalities, counties and state agencies — from hindering cryptocurrency use, and formally allow staking on blockchain networks. It would also allow residents to have self-custody and hold their digital assets.
Cryptocurrency staking is legal in every state except California, Maryland, New Jersey and Wisconsin. Staking lets cryptocurrency holders lock, or commit, their tokens to a blockchain. Doing so helps to validate transactions and secure the network. In exchange, owners of the crypto can earn rewards similarly to earning interest on a savings account or receiving a stock dividend.
“The bill limits the ability of state agencies, county and local governments from regulating digital assets like blockchains and cryptocurrency,” Neylon told State Affairs. “It also clarifies digital asset-related activities that are permissible by law, the basic framework for how digital assets operate, and one of those is staking, which is how you hold onto crypto.”
“This is a way of clarifying in law what’s permissible but also limiting the ability of state agencies, counties and local governments from regulating, creating a different patchwork of rules throughout Wisconsin,” Neylon said.
The bill’s proponents say it gives Wisconsinites the same opportunities to participate in the digital economy as residents in the majority of the country. They also say it will spur economic growth as it has in Wyoming, which recently launched the first ever state-launched stablecoin, and Arizona, which is in the process of creating a
state-level strategic bitcoin reserve.
Supporters also say the bill will establish Wisconsin as a crypto-friendly state. State agencies and political subdivisions would not be able to prohibit or restrict someone from accepting digital assets in exchange for legal goods and services or from holding digital assets in self-custody.
Wisconsin law is currently murky on whether individuals who self-custody their cryptocurrency are considered money transmitters and thus need to be licensed by the Department of Financial Institutions. This is a common gray area in state law for crypto holders.
Proponents of digital assets say it should be no different than holding hard cash in a leather wallet, but others disagree. Pennsylvania in July updated its Money Transmitter Act to include virtual currencies, making the licensing standards the same as for traditional fiat transmission.
Wisconsin law does not define “money” as including virtual currencies. But some say it should be included and that individuals who self-host cryptocurrency, or hold it on their own wallets instead of relying on a third-party custodian, are transmitting money. If passed, state law would be clarified to conclusively establish that individuals self-hosting digital assets are not money transmitters and do not need to be licensed by the DFI.
Neylon said he spoke with crypto holders who felt they needed to move out of the state because of the lack of regulatory clarity. He also said he heard from business owners who were facing roadblocks when trying to innovate and receive payment for their goods in crypto because of the current regulatory landscape in Wisconsin.
“There are ways that we could be friendly to the crypto community and those that want to utilize blockchain in innovative, new types of businesses,” Neylon said. “There is a kind of push-pull in crypto policy when it comes to balancing consumer protections and allowing for innovation in the space.”
A Wisconsin bill to bolster consumer protections for cryptocurrency kiosks, also known as bitcoin ATMs, was introduced in August. Neylon at the time told State Affairs he was working on the cryptocurrency framework that he just introduced. Neylon said he himself is still skeptical of digital assets, but recognizes the necessity
of having a clear regulatory framework in place.
“It’s here, and a lot of people want to innovate in the space,” Neylon said. “As a government, we should be providing these businesses and these entrepreneurs some level of certainty that a local or county government or even state agency won’t come in and not allow them to build using digital assets because they dislike it or
misunderstand.”
Emma Kinery is a State Affairs national reporter covering state politics and policy out of our Washington, D.C. office. Contact Emma Kinery at ekinery@stateaffairs.com or on X @EmmaKinery.