Wisconsin's Pro-Crypto Bill Sparks State-Federal Regulatory Tension

Wisconsin lawmakers have introduced Assembly Bill 471 to exempt key cryptocurrency activities from state money transmitter licensing requirements, positioning the state as a potential hub for blockchain innovation. The bill, sponsored by a bipartisan group of legislators including Republicans Neylon, Gustafson, Gundrum, Knodl, Kreibich, Krug, and Tranel, along with one Democrat, was introduced on September 29, 2025, and referred to the Committee on Financial Institutions title1^[1]. The legislation seeks to clarify regulatory boundaries for blockchain operations by excluding activities such as mining, staking, blockchain node operation, and software development from licensing obligations under the state's financial institutions framework title2^[2].

Under the proposed framework, individuals and businesses would no longer need money transmitter licenses for activities involving the exchange of digital assets without fiat currency conversion, operating blockchain nodes, or using self-hosted wallets for custody. The bill explicitly prohibits state and local governments from restricting cryptocurrency usage, ensuring residents can accept digital assets for legal goods and services without regulatory interference title5^[3]. A notable provision creates a securities exemption for third-party staking service providers, provided rewards are generated solely by blockchain networks and not through intermediary profit models title1^[4].

The bill's introduction follows Wisconsin's controversial liquidation of its $300 million stake in BlackRock's Bitcoin ETF in May 2025, a move critics argued signaled wavering commitment to digital assets title4^[5]. In contrast, Assembly Bill 471 reflects a pro-crypto stance, aiming to reduce compliance burdens for startups and independent operators. Supporters argue the legislation could attract decentralized platforms, staking services, and blockchain developers to the state by fostering regulatory clarity title5^[6]. However, opponents caution that exemptions might complicate coordination with federal regulators like the SEC and FinCEN, particularly for custodial services or fiat conversions, which remain subject to existing oversight title2^[7].

Wisconsin's approach aligns with broader national trends, as states such as Wyoming and Texas have enacted similar laws to promote blockchain innovation. Wyoming's Frontier Stable Token (FRNT) and Texas's sovereign Bitcoin initiatives highlight the competitive landscape for crypto-friendly jurisdictions title2^[8]. Meanwhile, Democratic lawmakers in Wisconsin have introduced separate measures targeting crypto kiosks, requiring licenses, fraud alerts, and daily transaction caps of $1,000 to address rising scam-related losses title4^[9]. These contrasting legislative efforts underscore the state's internal debate over balancing innovation with consumer protection.

The bill's path to enactment remains uncertain, with a 25% progression rate according to legislative trackers. While Republican sponsors advocate for broader adoption, bipartisan support will be critical for its advancement. If passed, the measure could reshape Wisconsin's digital asset ecosystem, offering a precedent for other states and reinforcing the state's role in the evolving crypto regulatory landscape title2^[10].