New crypto law prevents forced private key disclosure but won't save your assets

Wyoming has introduced a law protecting individuals from the compulsory disclosure of cryptographic private keys. Still, authorities retain the power to seize your crypto assets and force you to provide information.

Private cryptographic key

Wyoming lawmakers have eventually passed the bill preventing the compelled disclosure of cryptographic private keys. The voting in the Wyoming Senate on February 14 went smoothly, with 31 in favor and 0 against. The bill faced some opposition in the Wyoming House of Representatives on the following day, with a voting result of 41-13. Now it's up to the state governor, Mark Gordon, to sign it into law. If so happens, as of July 1, individual crypto users in Wyoming will be protected from having to divulge their private keys.

The issue has been on the table since the summer of last year, as Wyoming lawmakers decided to address mounting pressure from U.S. attorneys to force the disclosure of private keys for pre-trial motions. Courts have been increasingly assenting to their demands, causing unrest among cryptocurrency users and businesses, as disclosing private keys puts digital assets and identities at risk.

The Wyoming legislation is a step in the right direction, but unfortunately, a small and hardly effective one. The bill not only contains a significant exception but also falls short of protecting individuals' digital assets.

Even though it states that "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", it allows for coercion if "a public key is unavailable or unable to disclose the requisite information with respect to the digital asset, digital identity."

Read also: New crypto law prevents forced private key disclosure but won't save your assets

Even worse, in the next section, the bill clearly allows compulsion in dealing with an individual's digital assets, effectively limiting their property rights. The same regards disclosing information related to digital assets and identities, as long as such action complies with the provisions of the previous section.

Wyoming crypto bill

Wyoming has been considered one of the crypto-friendliest states, with legislation providing more consumer protection than most other U.S. jurisdictions. One notable example is the law passed in 2021, which recognizes decentralized autonomous organizations (DAOs) as limited liability companies. Since then, however, the state hasn't advanced much in embracing healthy alternatives to the FED-issued dollar.