Loyalty, care, and good faith, with one wrinkle that matters here. Wyoming sets the duty of care as what “a person in a like position would reasonably exercise under similar circumstances,” and for private key management there is no settled benchmark for what that means. So the operating agreement should define the standard, rather than leaving a court to construct one years later.
Part of our guide: Wyoming Crypto LLC.
The short version
- Duties of loyalty and care apply, along with a contractual obligation of good faith and fair dealing that an operating agreement cannot eliminate (W.S. 17-29-409, 17-29-110(c)(v)).
- The duty of care is measured against a person in a like position, a standard that assumes a body of accepted practice. For key custody, that body is thin.
- The statute permits reliance in good faith on a competent and reliable source, which is the strongest statutory argument for using a qualified custodian.
- The duty of loyalty requires accounting for any benefit derived from company property. Staking rewards routed to a personal address are exactly that.
- Good faith and fair dealing survives whatever the agreement says, so exculpation clauses have a ceiling.
What the statute requires
The duty of loyalty is specific and, read against digital assets, unusually pointed:
“(b) The duty of loyalty … includes the duties: (i) To account to the company and to hold as trustee for it any property, profit or benefit derived by the member: (A) In the conduct or winding up of the company’s activities; (B) From a use by the member of the company’s property; or (C) From the appropriation of a limited liability company opportunity”
Wyo. Stat. Ann. § 17-29-409(b)
“Any profit or benefit derived … from a use by the member of the company’s property” describes something that happens routinely and accidentally in crypto. Staking company assets and letting rewards land in a personal wallet is a benefit derived from company property. So is using company holdings as collateral for a personal loan, or claiming an airdrop that accrued to company coins.
None of that requires bad intent. It requires only that rewards arrive somewhere nobody designated, which is the default outcome unless someone chose otherwise in advance.
The duty of care, and why crypto complicates it
“Subject to the business judgment rule, the duty of care … is to act with the care that a person in a like position would reasonably exercise under similar circumstances and in a manner the member reasonably believes to be in the best interests or at least not opposed to the best interests of the company.”
Wyo. Stat. Ann. § 17-29-409(c)
That standard works by reference to what a reasonable person in the role would do. For managing a building or a portfolio of securities, decades of practice tell you. For deciding between a hardware wallet in a safe, a 2-of-3 multi-sig across three households, and a qualified custodian, there is no comparable body of settled expectation.
The practical consequence is that the standard will eventually be constructed after the fact, by someone looking backwards at a loss. That is an uncomfortable way to be judged, and the operating agreement can improve it by writing down what the company decided reasonable care means: which custody model, what thresholds, what review cadence, what gets rehearsed.
The same subsection offers the other half of the answer:
“In discharging this duty, a member may rely in good faith upon opinions, reports, statements or other information provided by another person that the member reasonably believes is a competent and reliable source for the information.”
That is the statutory basis for delegating custody to a qualified custodian, or a security decision to a specialist, and having the reliance itself be part of discharging the duty. It rewards documented advice.
What the agreement cannot remove
An operating agreement may narrow a good deal, and it runs into a floor. Under W.S. 17-29-110(c)(v) it may not eliminate the contractual obligation of good faith and fair dealing, which § 17-29-409(d) applies to managers and members alike in both structures.
It also may not unreasonably restrict the information rights in § 17-29-410. A manager who withholds records from a member is not protected by a clause purporting to allow it.
What I actually see
Duties get treated as boilerplate until a family member asks a question the manager cannot answer.
The recurring one is records. A manager who cannot produce, on request, what the company holds and where, has a problem that is not really about custody. Under § 17-29-410 the member is entitled to ask, and the answer is the manager’s obligation to have.
The second is the accidental benefit. A manager stakes company assets, rewards land in the wallet they have always used, and a year later there is no clean way to say which coins belonged to whom. Nothing dishonest happened, and § 17-29-409(b)(i)(B) still describes it.
The habit worth building is small and dull: a standing note of any decision that could be second-guessed, with the reason and what it was based on. Which custodian and why. Why the threshold was set where it was. Whose advice was relied on. That documentation is what converts a decision into a defensible one, and it takes minutes at the time.
Where this goes wrong
The manager is careful about markets and casual about custody, and the duties run the other way.
The failures cluster. Rewards and airdrops arriving at undesignated addresses, which is the loyalty breach nobody intends. No written record of why a custody arrangement was chosen, so the care standard gets constructed by hindsight. Records that cannot answer a member’s lawful request. And exculpation clauses drafted broadly enough that the manager believes they are covered for things the statute does not allow to be waived.
The structural version of the problem: managers are usually chosen for being the family member who understands crypto, and understanding crypto is not the same as understanding what a fiduciary owes.
The decision rule
- Designate where every inbound event lands before it happens, including staking rewards, airdrops, and forks. This closes the most common loyalty exposure.
- Write down what reasonable care means for this company: custody model, thresholds, review cadence, rehearsal schedule.
- Document reliance. Name whose advice was taken and when, since the statute makes good-faith reliance part of discharging the duty.
- Keep records answerable on demand, because a member is entitled to ask.
- Do not over-draft exculpation. Good faith and fair dealing and the information rights cannot be removed.
- Record decisions that could be questioned, with the reason, at the time.
Where this sits
Duties are the consequence of the structure. Whether the company is manager-managed decides who carries them. The operating agreement is where the standard of care can be defined instead of inferred. Records are how the duty is demonstrated, and separation of personal and company assets is where the loyalty duty is most often breached without anyone deciding to.
The through-line: a manager is judged on what can be shown afterward, and almost none of it can be reconstructed later.
Sources
- Wyoming Limited Liability Company Act, Wyo. Stat. Ann. §§ 17-29-110, 17-29-407, 17-29-409, 17-29-410 (Wyoming Legislature, Title 17)
- Wyoming digital asset statutes, Wyo. Stat. Ann. §§ 34-29-101 to 34-29-102
- IRS, Revenue Ruling 2023-14, staking rewards
- IRS, Digital assets
- IRS, Recordkeeping for businesses
- NIST, Special Publication 800-57, Recommendation for key management
Related
- Should a crypto LLC be manager-managed?
- Crypto LLC operating agreement checklist
- What records should a crypto LLC keep?
- Should a crypto LLC have a multi-sig policy?
- Can a Wyoming LLC stake crypto?
- Wyoming LLCs for digital assets
Last updated: 3 August 2026.
This article is general education, not legal, tax, or investment advice. Fiduciary obligations depend on your structure, your documents, and your jurisdiction. Talk to a qualified attorney about your own situation.
