Wyoming could still issue a single stable token by the end of this year, fulfilling a deadline stipulated in Wyoming’s stable token law. But the Wyoming Stable Token Commission would need to move quickly in choosing a starter blockchain platform, new commission Executive Director Anthony Apollo told commissioners.
Apollo recommended the blockchain platform Ethereum during the commission’s most recent meeting, just to get started, because the platform has the widest adoption rate to date and has had the most stress testing of available platforms.
Ethereum is already compatible with several other blockchains, so adopting it now to facilitate issuing a single stable token by the end of the year to meet a legislative mandate would not preclude adding other blockchains in the future that might have better privacy measures.
“Although there are merits to other systems, everything is going in one direction, in my perspective,” Apollo said. “That being said, I think there are a very large number of other chains that are up and coming that have privacy technology that we should be looking into pretty substantially.”
Privacy has been a particular concern of Wyoming Treasurer Curt Meier, who is on the commission.
“I’m going to steal a line from you (Meier) from up in Casper the other day,” Apollo said. “It shouldn’t matter if you’re buying bubble gum or bullets. No one should know what you, as a private citizen, are purchasing.”
Side By Side Comparisons Needed
Several commissioners, including Meier, said they favor the idea of using Ethereum as a starting point for Wyoming’s stable token, but Commissioner Jeff Wallace was not comfortable selecting a blockchain platform without seeing a side-by-side comparison of other options.
Gov. Mark Gordon, though he had spoken favorably of Apollo’s idea to look at Ethereum for a starting point out of expediency, agreed the commission should do some comparisons before voting.
There was some discussion of sending out a request for proposals, but as Commissioner Flavia Naves pointed out, blockchain platforms are decentralized by their very nature. There’s no one to pick up a request for an RFP.
Putting off a decision on the platform means the stable token will be running headlong into a big obstacle — namely the Thanksgiving and Christmas holidays, as Apollo pointed out. But the director suggested the timeline could still work out, if the commission set a special session ahead of the report that’s due to the Select Committee on Blockchain on Nov. 1.
“Perhaps that research is encapsulated in the report,” he said. “Everyone has a chance to digest it, and then, shortly thereafter, we can again continue to make this particular decision.”
Apollo has already been working through what will be in his Nov. 1 report to the Legislature, he told the commission. It will be an outline of how he expects things to go, including an executive summary with high-level details on what has been accomplished to date, who has been on-boarded, as well as how the subcommittees are operating.
“(It will) update them on all the financials that we’ve discussed, as well as the anticipated budget that we’ll have going into appropriations,” he said. “We’ll talk a little more about token design, echoing what we’ve just discussed here. The legal side of things will incorporate my memo regarding the Wyoming Stable Token status as a security.”
The report will also outline any legislative tweaks that Wyoming’s Stable Token law may need to have more functionality in the future.
“Finally, it will give them a formal roadmap of what we expect to deliver and by when, and we’re hoping to launch this whole thing by next year,” Apollo said.
Snubbing Cardano?
A decision to use Ethereum might be perceived as a snub by Cardano founder Charles Hoskinson, who has offered to create Wyoming’s stable token on his platform for a dollar in previous meetings of the Wyoming Stable Token Commission.
Hoskinson created the Cardano blockchain after leaving Ethereum. A dispute had developed over whether Ethereum should be for profit or nonprofit. Cardano was in the for-profit camp.
Hoskinson has a bison ranch in Wheatland, and he’s headquartered his company in Wyoming, citing the Cowboy State’s regulatory framework.
Hoskinson has told Wyoming’s Stable Token Commission that the world at large is watching what Wyoming is doing, and mentioned that when he was in Abu Dhabi, people there were talking about it.
“Abu Dhabi doesn’t discuss Wyoming very much, and when they do, it’s about oil and gas,” he said. “It’s not about cryptocurrency legislation. So, the state has achieved a tremendous reputation throughout the world as an innovator, pioneer, and one that was willing to take a risk to embrace the new industry.”
But, he added at the time, Wyoming’s legislation is “very risky” if mishandled.
“There’s many challenges to it, so our industry as a whole has a unified incentive to ensure that it is a success,” he said. “And so, we’ll do our part, and I hope the industry can work together to provide as much assistance was possible on both the regulatory and technical side to get this where it needs to be. We’re here to help.”
Representatives of Emurgo, a company that supports adoption of Cardano, were at the commission’s most recent meeting, flying in from Singapore to offer their expertise, particularly in Asian markets.
Uncertain Future
Boosters of Wyoming’s stable token have said community bank involvement is key to their best-use scenarios, but the federal government has not been too friendly to digital assets of late.
The Federal Reserve and the Securities and Exchange Commission have taken many measures that appear intended to wall cryptocurrencies and other digital assets off from the banking environment. Wyoming’s digital asset banks, called special purpose depository institutions, are caught in the crosshairs.
One of the strongest advocates for community bank involvement for Wyoming’s stable token is American CryptoFed DAO. The decentralized autonomous organization is interested in using Wyoming’s stable token to create a frictionless payment system that would allow some of the nation’s largest retailers to avoid credit card fees.
Wyoming could realize a multibillion-dollar payday if that plan is realized, American CryptoFed’s CFO Xiaomeng Zhou has said previously, but in American CryptoFed’s vision of things, community banks are an integral part of the mix, he told commissioners.
That’s not a scenario likely to happen anytime soon, Wyoming Banking Association President and CEO Scott Meyer suggested in his remarks to the commission.
Meyer questions whether a Wyoming stable token will hold its value, given that it will be backed by U.S. Treasuries. Over-reliance on treasuries was among factors that led to the collapse earlier this year of Silicon Valley and Silvergate banks, he pointed out.
The two banks were also allowing deposits far in excess of the FDIC’s limit. When it became clear that devalued treasuries would not cover all of the deposits exceeding those limits, there was a run on the banks, prompting federal regulators to take them over.
Wyoming’s stable token does differ in one important respect to SVB and Silvergate. While the state does plan to buy treasuries to back its token and gain interest on the funds it’s holding, it plans to keep 102% of the value of its stable tokens on reserve. Banks don’t hold that much in reserve.
Even if all the technical problems are resolved, though, Meyer still sees regulatory hurdles that he believes will remain for a long time.
“When you see what’s happening right now in the Gaza, and you see what’s happening with Israel, and you’re finding out now that a lot of the funding is going along with some of this stuff, like Hamas, whatever is going through cryptocurrency, I can almost bet you that nothing will happen regarding cryptocurrency in the banking world, at least in the near future,” he said.
That makes it less likely community banks, which have to comply with federal regulations, will dip their toes in anything that could even remotely be associated with cryptocurrency, including stable tokens.
Renée Jean can be reached at renee@cowboystatedaily.com.
