The Wyoming Stablecoin and the Rise of State-Based Cryptocurrencies

The Wyoming Stablecoin Is Huge News for One of the US’ Most Crypto-Friendly States

Wyoming holds the title of being the first state in the US to develop its own stablecoin.

Ever since the boom of ICOs in 2017, the United States has made very few–if any–significant steps toward blockchain adoption at an official level.

While some states promote a friendly environment for crypto startups, the rest have stuck with relatively tough policies.

If this new digital asset comes to fruition, it could serve as a step toward further crypto adoption in the US.

Key Takeaways

• The Wyoming stablecoin will be backed by the US Dollar and fully supported by the state’s local authorities. 
• The earnings generated from various on-chain activities will serve to cover operational costs.
• Anthony Apollo, who has robust experience with blockchain projects has taken the position of Executive Director.
• Block Time Financial issued the first test Wyoming stablecoin token in November 2023.
• The Federal Reserve could create obstacles for the Wyoming stablecoin and prevent its circulation outside of the state.
• Wyoming is one of the most crypto-friendly states, boasting a favorable environment for blockchain startups.

What You Need to Know About Wyoming’s Stablecoin

Similar to many of the stablecoins that already exist, the price of Wyoming’s stablecoin will be pegged to the US Dollar. According to the Wyoming Stable Token Act, it will come with the following characteristics:

• The token will be redeemable for $1 USD upon demand.
• The newly created Wyoming stable token trust account will serve as a vault for storing the notional value of all the circulating coins.
• Citizens will be able to purchase the Wyoming stablecoin with US dollars. 
• The state, in turn, is going to invest the collected money in short-term low-risk government treasuries.
• The earnings generated above 102% of the circulating token value are to be deposited into a special administration account to cover operational costs and contribute to other state initiatives.

The Wyoming State Treasury is going to cover $500,000 USD for the startup costs associated with the issuing and administering of the tokens. 

However, this number is not set in stone. The budget may grow as the project progresses.

Yet, the state expects a return on this investment. Presumably, this will be in the form of interest rates.

With the average interest rates that blockchain-based stablecoins provide, the task shouldn’t be so hard, given that the project succeeds.

How Far Has the Wyoming Stablecoin Progressed?

Wyoming’s stablecoin was supposed to go live at the end of 2023. While this hasn’t happened, the project has achieved a few significant milestones.

Back in July, 2023, the commission opened a position for the Executive Director to perform various work duties and manage all aspects of the Stable Token Commission. 

In September, Anthony Apollo, who has robust experience in the blockchain industry took this role. Previously, he managed a few crypto projects under the hood of Consensys, the company known for its major contribution to the Ethereum blockchain infrastructure.

The release of the first test Wyoming stablecoin token has become another significant step in the course of the project. This took place on November 2nd, 2023.

As for the technical characteristics of the new asset, at the time of writing, no precise information has been made available. 

The Wyoming Truth, a local news agency, asserts that Wyoming’s stablecoin will reside on the Ethereum network. However, Apollo supposes that the state may move to support multiple chains in the future.

A Potential Conflict With The Federal Reserve

The Federal Reserve could impose severe obstacles for Wyoming’s stablecoin. 

If Federal authorities decide that the state-issued currency imposes any risks for the US Dollar, they may simply forbid the new digital currency to circulate anywhere outside of Wyoming.

“We are not issuing a new currency,” said Wyoming senate minority leader, Chris Rothfuss, in an interview with local media.

“The Wyoming stable token is a digital representation of a U.S. dollar held in trust by the state of Wyoming on behalf of the token holder. We are not competing with the Federal Reserve — we are enabling a technology.”

Depending on how this case progresses, it could significantly simplify the process for other states to issue their own stablecoins.

Wyoming Is One of the Most Crypto-Friendly States

One of the biggest challenges associated with the legalization of crypto in the US is the lack of a unified legal structure across all the states.

In particular, states like California, Hawaii, and New York have been particularly hard on crypto with high capital gains taxes and unfavorable regulatory frameworks.

On the contrary, Wyoming is considered one of the most crypto-friendly regions–along with Arizona, Colorado, Florida, and a few other states. 

Here’s what the state has done so far in terms of crypto legalization:

• A charter for banks that work primarily with digital assets. Thanks to this initiative, Kraken Bank has been able to officially establish itself in the region.
• DAO’s recognition as a legal entity. The state governor, Mark Gordon, signed a bill in 2021 granting legal status to Decentralized Autonomous Organizations.
• Utility tokens are exempt from securities regulation. Thanks to a law passed back in 2018, life has been made easier for crypto startups.
• Companies being allowed to use crypto alongside cash during bankruptcy. This makes crypto holdings free from any legal incumbrances, providing clarity when crypto companies go bust.

As a result, Wyoming has become home to many companies that deal with crypto. Some of the most prominent projects residing in this state include Coinshift, Dragon Corp Games, Octopus Network, and many others.

If Wyoming’s stablecoin ambitions succeed, it could even usher in an age of similar crypto-friendly regulation in a larger number of US states.