Wyoming Takes Aim at Digitizing the Dollar with a State-Backed Stablecoin
Wyoming, already known for its forward-thinking approach to blockchain technology, is going a step further by launching its own U.S. dollar-backed stablecoin, called the Wyoming stable token. Scheduled to debut in the first quarter of 2025, this initiative aims to accelerate and reduce the cost of transactions while generating new revenue for the state. The Wyoming Stable Token Commission hopes it will serve as a blueprint for a digitized dollar at the federal level.
Key takeaways:
- Wyoming’s stablecoin is a bold move to advance crypto adoption. The state is aiming to be a leader in the transition from crypto speculation to real-world applications.
- This stablecoin could be a model for a US CBDC. The Federal Reserve has been slow to adopt a digital dollar, leaving a vacuum that Wyoming is poised to fill.
- The Wyoming stable token is built on public blockchains, prioritizing privacy and transparency. This approach contrasts with concerns around privacy and surveillance associated with government-run CBDCs.
- This initiative could expand beyond the dollar to encompass other assets. The technology could be applied to digitize commodities such as gold and oil, real estate, and even governmental obligations.
A "Nimble and Entrepreneurial" Approach
Long gone are the days when venture capital was flowing into fintech startups with bold ideas — and little to show in terms of business metrics and fundamentals. As crypto investing becomes more mainstream and institutionalized with bitcoin ETFs, Wyoming is already pushing into the next phase of growth for crypto: consumer payments.
"It is clear to me is that digital assets are going to have a future," said Wyoming Governor Mark Gordon at the Wyoming Blockchain Symposium in Jackson Hole. "The United States has to address this issue. Washington’s being a little bit stodgy, which is why Wyoming, being a nimble and entrepreneurial state, can make a difference."
Wyoming is no stranger to pushing the boundaries of business law. In 1977, it created the LLC (Limited Liability Company), and since 2018, it has passed over 30 pieces of crypto legislation to foster a favorable regulatory environment for businesses and investors.
A Vision for Everyday Use
The state is currently evaluating potential partners and vendors with extensive tech expertise to assist in the development of the stable token. Exchange and wallet providers, like Coinbase and Kraken, are crucial to the process, enabling users to purchase and hold the token. The state intends to issue the token to an exchange, which will then distribute it to retail users.
"When you walk into Cowboy Coffee in Jackson, Wyoming, and you want to buy your latte, there’s going to be their wallet there in Solana that you can use to buy your coffee with the Wyoming token," explained Flavia Naves, a commissioner at the Wyoming Stable Token Commission.
The project also has a public good element: the commission plans to invest the reserves backing each token in circulation into Treasurys and reverse repos, using the interest earned to fund public schools.
Ensuring Stability and Trust
Governor Gordon emphasized the importance of resisting the temptation to focus solely on potential state revenue and prioritizing reserve management instead. While stablecoins are designed to maintain parity with the underlying asset (typically the U.S. dollar), they have deviated from their pegs due to factors such as :
- Sudden changes in demand
- Insufficient liquidity
- Inadequate collateralization
- Regulatory crackdowns
- Network congestion
The commission plans to maintain a liquidity buffer within its reserves to mitigate potential deviations and ensure full transparency.
"There will be audits available to the public on how many tokens [are] in circulation [and] how much money is in the bank account backing, so you can always see there is a 1-to-1 [stablecoin-to-dollar ratio]," Naves explained. "This is a public token as well so as with any public service, all the information is available."
The commission encourages public participation in its stable token meetings, making the minutes accessible on its website.
A Faster, More Efficient Path to a Digital Dollar
Naves acknowledges that the Wyoming stable token is partly a response to the Federal Reserve’s reluctance to create a central bank digital currency (CBDC) at the federal level. More than 30 countries, including the digital euro, are piloting CBDCs, and 19 of the G20 nations are in advanced stages of developing their own.
While CBDCs have sparked concerns regarding privacy and surveillance on government-run blockchains, the Wyoming stable token utilizes public blockchains like Ethereum and Solana. This approach prioritizes anonymity and transparency. The specific networks chosen for the token have yet to be announced, but the commission intends to make the coin available across multiple platforms.
If successful, the Wyoming stable token could go beyond digitizing the dollar:
"Down the road, the intent is to utilize the same technology … to enable other elements to turn into tokens and be on blockchains, whether it is commodities such as gold or oil, whether it is real estate, other governmental obligations – those are still to be determined," said Naves. "But the success of this initial use case, which is digitization of the U.S. dollar, is the one that is going to enable other use cases to proceed."
The Next Big Step in Crypto Adoption
Wyoming’s initiative to create a state-backed stablecoin marks a significant step toward mainstream adoption of crypto technology. By offering a consumer-friendly and transparent alternative to a traditional digital dollar, the state could pave the way for a more decentralized and accessible financial system. While the success of the Wyoming stable token remains to be seen, its launch represents a bold vision for the future of finance.