Montana moves forward on regulatory framework for blockchain, digital assets

This story was originally published by the Daily Montanan.

The Montana Legislature grappled with a lot of technological innovation during the 2025 session including determining how to regulate the growing digital economy and this month has seen the launch of new laws and committees focused on the digital space. 

One new law, the Financial Freedom and Innovation Act, took effect in October, paving the way for companies that issue network tokens to do business in Montana, and ensuring the State Auditor’s office has authority to regulate the burgeoning industry and prosecute bad actors. 

The bill, Senate Bill 265, carried by Sen. Daniel Zolnikov, R-Billings, defines a number of buzzwords in the digital asset space — such as network token, blockchain, and decentralized network — in state law. It also provides the framework for uses of network tokens and what boxes businesses must check off to do business in Montana. 

Under the new Innovation Act in Montana, companies that issue digital tokens — used to power decentralized services like computing, data storage and media streaming, among other things — can register with the Commissioner’s office as non-securities assets, making Montana among the first states to do so.  

Zolnikov said network tokens have the ability to decentralize so many parts of industry, essentially cutting out middle man companies, which he said fits a Montanan ethos. 

“If you have a new technology that’s an exception to the rule, but you want to play by the rules, what do you do?” he said. “We finally gave them a regulatory path forward.”

In a press release, Commissioner of Securities and Insurance Jim Brown said the new law charts the course for “responsible innovation.”

“This law gives entrepreneurs the certainty they need while ensuring Montanans are protected. SB 265 strengthens both our business climate and our national reputation as a state that embraces innovation while striking the right balance,” Brown said. 

Speaking to the Daily Montanan this week, Brown said that one of his office’s main roles is to protect Montana consumers from “fraudsters and bad actors.”

“Not only in the insurance area, but in financial institutions, which includes digital currencies and anything related to the blockchain,” Brown said. “…At this point in the world of digital currency, there isn’t a whole lot on the books in Montana about giving either my office or the attorney general’s office the authority to either regulate companies or persons who engage in this.”

On the consumer protection front, Brown has been advocating on a national level to strengthen laws in the digital space. He recently joined with securities regulators from across the nation in urging the federal government to move forward with regulating aspects of the digital economy, including giving states prosecutorial authority in the digital space. 

In a letter sent last month, Brown and his counterparts with the North American Securities Administrators Association asked for changes to a proposed federal market structure legislation that he said “is a gift to fraudsters,” by limited actions states can take to investigate and charge crypto scammers. 

The Association is also behind legislation called the Support Anti-Fraud Enforcement (SAFE) Act which would cement state authority to prosecute fraud involving digital assets. 

“We believe we have the authority to go after these bad actors,” Brown said. “I take the authority of this office to prosecute bad actors very seriously to protect consumers. … and we don’t want to create a system where smaller bad actors fall through the cracks.”

Brown said with the explosion of digital assets in recent years, his office has seen a parallel increase in fraudulent claims within the digital space. 

Last year, his office received nine complaints of digital asset fraud, totaling more than a million dollars. Through September of this year, his office has already received 20 complaints — to the tune of $3.1 million. 

On Tuesday, Brown’s office issued a press release about an individual charged in Missoula County for defrauding investors, including several elderly Montanans, through a fraudulent cryptocurrency scheme. 

According to the release, an Idaho resident and two uncharged co-conspirators set up a “fund” of more than one million dollars from investors purportedly invested in cryptocurrency. 

The defendant is charged with six felony counts of elder exploitation, securities fraud, operating a pyramid promotional scheme and operating as a securities dealer without a license. 

“By the end of the century, (blockchain technology and digital assets) are going to be so integrated in our economy and our way of life that people won’t even recognize how we operated financially in 2025,” Brown told the Daily Montanan. “While that’s exciting and I want to be on the forefront as a regulator and help support that, we have to keep our ability to prosecute bad actors. We can’t have it be the wild west out here.”

Blockchain and Digital Innovation Task Force holds first meeting

On Monday, members of the newly formed Blockchain and Digital Innovation Task Force met for the first time to discuss the state of cryptocurrency and digital asset regulation in Montana and how to remain competitive in the digital economy. 

The task force, created during the 2025 Legislature, is comprised of legislators, representatives from the State Auditor and Attorney General’s offices, and public members with experience in the financial or digital technology sectors. 

Co-chair Sen. Gayle Lammers, R-Hardin, said he envisions the task force as “a big brainstorming operation.”

“So many people think about crypto when they think about blockchain, but it’s so much more than that, so much more than the financial end of it,” Lammers told the task force. “But, it has implications in agriculture, fraud, chain of custody, record keeping — all kinds of things we could apply this baby to.”

One area of discussion on Monday revolved around Wyoming’s approach to digital assets, which has included launching their own state-backed cryptocurrency. 

“They’ve certainly laid the baseline for this,” Brown, a member of the task force, told the Daily Montanan. “We might not be looking at having Montana be the issuer of a stablecoin, but we will look at a model of what’s made Wyoming a leader in blockchain technology … we’ll look at how Montana can be an innovator like Wyoming is, maybe even going beyond what they’ve done.”

In upcoming meetings, the task force will focus on educational sessions to understand the scope of the digital economy and identify specific topics to tackle, as well as examine how the other states are currently regulating blockchain and other digital technologies. 

“I think we’re going to be able to come up with some real great stuff here to make our lives easier, and to protect the people in Montana,” Lammers said.

Daily Montanan is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Daily Montanan maintains editorial independence. Contact Editor Darrell Ehrlick for questions: info@dailymontanan.com.