Long gone are the days when venture capital poured into fintech startups with bold ideas – and little in the way of business metrics and fundamentals.
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As crypto investing becomes more mainstream and institutionalized with bitcoin ETFs, Wyoming is already pushing into the next phase of development for cryptocurrencies: consumer payments.
The state is creating its own US dollar-backed stablecoin, called the Wyoming stable token, which it plans to launch in the first quarter of 2025 to offer individuals and businesses a faster and cheaper way to transact while creating a new revenue stream for the state. The team behind it hopes it can serve as a model for a digitized dollar at the federal level.
Success would be “adopting a stable currency… that is transparent, fully backed by our short-term funds [and] it depends on the dollar,” Wyoming Governor Mark Gordon told CNBC at the Wyoming Blockchain Symposium in Jackson Hole. “One of the big things for me is being able to bring a lot of our debt back onshore, because if it’s bought from treasuries and backed by Treasurys, will help stabilize this market to some extent.”
“It’s clear to me that digital assets will have a future,” Gordon said. “The United States needs to address this issue. Washington is a bit of a bore, so Wyoming, being an agile and entrepreneurial state, can make a difference.”
The Cowboy State is no stranger to pushing the boundaries of business law. In 1977, he created the LLC and has passed more than 30 crypto bills to create a favorable regulatory environment for businesses and investors as of 2018.
The development of the project is increasing at a time when many participants in the crypto market are wondering what is next. Making bitcoin ETFs available to US investors in January was a huge feat. It was the result of over 10 years of effort by the industry and sent prices to new records this year. However, although the market is still bullish, trading has been limited for months.
Furthermore, crypto and its underlying blockchain technology were always meant to be used for more than price speculation. Consumer payments, in many cases via stablecoins, are widely seen as the killer app for crypto and the gateway to mainstream adoption of this technology.
The vision
Wyoming is currently looking at potential partners and vendors with more expertise to help build the stable token. It will require exchange and wallet providers – Coinbase and Kraken, for example, offer both – to buy and hold the token. The government plans to issue the token to an exchange so that the exchange can issue it to the retail user. From there, it should be just another way to pay for everyday things, said Flavia Naves, a commissioner on the Wyoming Permanent Standards Commission.
“When you go into Cowboy Coffee in Jackson, Wyoming and you want to buy your latte, they’ll have their wallet right there in Solana that you can use to buy your coffee with your Wyoming coupon,” he said, describing the vision for the stablecoin.
It also has a public good: the board plans to invest reserves backing each mint in circulation in Treasurys and reverse repos, and use the interest earned on those investments to fund its public schools.
At the conference, Gordon stressed the importance of resisting the urge to focus too much on how much money the state can make here and prioritizing reserve management.
Maintaining parity
Stablecoins are supposed to maintain parity with an underlying asset, usually the US dollar, but they can and have deviated from their commitments due to a rise or fall in demand – especially due to illiquidity – poor collateral, regulatory crackdowns or network congestion.
Naves emphasized that there will be a “reserve” in the reserves to account for any potential discrepancies and full transparency to build and maintain public trust.
“There will be controls available to the public on how many tokens [are] in circulation [and] how much money is in the bank account support so you can always see that there is a 1 to 1 [stablecoin-to-dollar ratio]”, he said. “This is a public token and as with any public service, all information is available.”
The commission invites the public virtually to its meetings on the fixed mark and publishes the minutes of it website after.
“This is fully tentative and part of what we’ve worked out … is to make sure we can fully support whatever we’re going to do,” Gordon said. “Plus the fact that the law tells us that when a person buys a Treasury or a repo, we’ll have it as proof, you’ll be able to see it. So hopefully we can avoid the debegging issues.”
Digitizing the dollar – and beyond
Naves reiterated that Wyoming’s stable token is in part a response to the Federal Reserve’s reluctance to create a central bank digital currency, or CBDC, at the federal level. According to Atlantic Councilthere are more than 30 countries piloting a CBDC, including the digital euro, and 19 of the G20 countries are now in advanced stages of development.
CBDCs have been widely criticized due to privacy and surveillance concerns of government blockchains. But Naves said that won’t be the case here, as Wyoming plans to use public blockchains, such as Ethereum or Solana, instead of private networks. The team hasn’t specified exactly which networks it will use, but said it wants the coin to be available on many different platforms.
If successful, it could surpass the dollar.
“Down the road, the intention is to use the same technology … to allow other assets to be tokenized and be on blockchains, whether it’s commodities like gold or oil, whether it’s real estate, other government obligations. to be decided,” Naves said. “But the success of this initial use case, which is the digitization of the US dollar, is what will enable other use cases to move forward.”
