Blockchain Companies Already Creating Test Wyoming Stable Tokens

A blockchain company recently told top Wyoming officials that it’s already tested a Wyoming digital stable token at least 150,000 times.

Renée Jean

November 29, 202312 min read

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(Cowboy State Daily Staff)

Wyoming legislators may have let the Wyoming Stable Token Commission off the hook when it comes to releasing a single digital stable token by the end of December to meet an arbitrary deadline, but that doesn’t necessarily mean Wyoming Stable Tokens aren’t already floating around in the ether.

In fact, at least one company says it has already created a Wyoming Stable Token for testing purposes on its Stellar Test Net and Future Net.

Louis Morgan, co-founder and chief technology officer of Block Time Financial, told commissioners during their most recent Wyoming Stable Token Commission meeting that his company created a test Wyoming Stable Token on Nov. 2 and has already been putting it to work virtually.

“Since then, we have processed over 150,000 payments and thousands of trades between 2,997 accounts for about $2 in blockchain transaction fees,” he told commissioners. “These are examples of markets between the WST (Wyoming Stable Token) and the USDC Coin and the XLM native token for the blockchain and liquidity pools.”

USDC stands for US dollar Coin and is a stablecoin meant to represent a digital dollar. The XLM native tokens are referred to by Stellar as lumens. They are a network tool, meant to both facilitate transactions on the system, whether between banks, payment systems or people, and deter bad actors by imposing costs on use of the system.

All of the examples using the Wyoming Stable Token can be seen on the Stellar Expert Blockchain Explore website, Morgan added.

60-Plus Years Of Experience

Morgan urged the commission to continue a multi-chain approach for Wyoming’s Stable Token during his comments.

“A fast, low-cost blockchain would help solve many of the use cases in the business plan,” he said.

That includes distribution of financial services, retail token holders and efficient management of social programs.

“We have completed a project similar to the WST for a regulated financial institution,” Morgan added. “We specialize in the Stellar Blockchain used by MoneyGram, Franklin Templeton, Wisdom Tree, among others. It is used for a CBDC, pilot projects in several countries such as the Ukraine, the Philippines and the Marshall Islands.”

The chain, in use since 2014, also offers a transaction cost much lower than competitors, Morgan added. It’s 1/10,000 of a cent, with block confirmation times of just five seconds.

Morgan has more than 30 years in the financial sector, while his co-founder, Bruce Rosenheimer, is a Wall Street veteran of more than 35 years working on the Capital Markets teams at Solomon Brothers, Citi and JPM.

Blockchains ‘Chomping At The Bit’

Block Time Financial’s testimony helped illustrate a point Wyoming Stable Token Director Anthony Apollo made earlier while explaining to commissioners his ambitious timelines for a streamlined request for information and request for proposals process.

“I think there’s already enough teams, kind of chomping at the bit to speak with us about this,” he said. “And those are just the ones that have reached out proactively. There are plenty more of the groups out there who just may not be aware of where we are in the process, or they may be working on very similar initiatives overseas and may be interested in what the domestic version of what they’re already working on looks like.”

Apollo also suggested that the commission should prefer working with companies that are nimble and quick enough to provide a response in a short time frame.

“The caliber of groups we should seek to work with should be ready to provide information extremely quickly,” he said. “They should have clients that they could point us to. They should have pitch materials, they should have, you know, whatever we’re going to ask for, and for the RFI, to be clear, if you look at the appendix, we’re not asking for a ton of information there.”

More detailed information will be reserved for the RFP process, Apollo said.

“I tend to believe 25 days starting tomorrow is sufficient to get this done,” he said.

Getting The Right Players To Weigh In

Wyoming Stable Token Commissioner Joel Revill was among those concerned that the timeline Apollo has proposed will be too short.

“I worry that we’re not there yet in terms of our regulatory mousetrap, in terms of our reserves management, to present and try to draw in partners,” he said. “I know that we’re all hopeful to move forward as quickly as we can. It would be, at least for me, more important that we have folks involved in the RFI process that are existing payment networks, like Visa and MasterCard and PayPal, or layer one protocols, who have had an opportunity to review what this opportunity is, come to us and have an RFI discussion on how they would like to present to us.

“I just don’t see all of those things happening before mid-December.”

Likewise, Commissioner David Pope believes a strong case, with financial models, is “extraordinarily necessary” to the process.

“I would love to see a graph across multiple years of projected income versus projected expenses, and against what the resources will be,” he said. “I think, in my mind, I’m flying a little blind here on that, on these, on the expectations. I don’t know what is supporting those expectations.”

Getting Budget Numbers In Time For February

In the event that RFI responses are not as immediate as hoped, the timing could be extended, Apollo suggested.

Though, as Commissioner and Wyoming Treasurer Curt Meier and Commissioner and Wyoming Auditor Kristi Racines both pointed out, pushing the timeline too far out could affect determining a realistic budget in time for the forthcoming Budget Commission meeting in February.

The Legislature’s budgetary appropriation will be a key variable in the more formal request for proposals process, Racines said.

“The treasurer brings up a good, practical point,” she said. “I mean, we can’t award anything until the Legislature has passed the budget. So, I suppose there’s some … I think getting the RFI process running quickly is important, but the RFP process is constrained by that.”

There’s also a rapidly changing regulatory front to consider, Gov. Mark Gordon added.

“Things are moving so quickly, both on the technological front and in the regulatory framework,” he said. Against that backdrop, “having the opportunity to fully digest what the RFI is able to do is probably going to be a good thing.”

Commissioners ultimately decided to add a week to the RFI process, moving the deadline out to Dec. 18 from Dec. 11. They also moved their Wyoming Stable Token Commission meeting from Dec. 14 to Dec. 21.

A Marketing Plan Is Needed

The additional time will allow adding back in what Apollo described as “back of the envelope math” projecting how much the Wyoming Stable Token could generate for the state. That will be integral to a marketing document spelling out why the project makes sense for Wyoming and potential partners in the endeavor.

“I think most people in this room are better mathematicians than I am,” he said. “But with a 5% interest rate, if we get 1% of a $125 billion market firmly sat on those T-bills for a year, we’ll make enough money to cover all this and more.

“I’m happy to do the exercise and throw a couple of models together and do some stress-testing on it. That’s kind of the, for lack of a term, ammunition, I would expect to bring to the appropriations committee.”

Gordon suggested that holding reserves at 102% might not be a big enough cushion.

That’s something that Apollo said the Blockchain Committee also has been discussing as potential adjustments to the Wyoming Stable Token legislation.

The reserves percentage could be pared back in future years, Apollo added, once there are fewer unknowns and better data on what the actual level of reserves should be to assure appropriate liquidity.

“You see stable tokens de-peg when there’s a high time of stress in the market and uncertainty whether the issuer will be able to meet its obligations for redemption,” Commissioner Flavia Naves said.

De-pegging refers to the situation where a stable token falls below the value it’s supposed to be holding at. In this case, each Wyoming stable token is supposed to represent one digital dollar.

It’s important to look at those high times of stress that caused de-pegging, she suggested, and build enough liquidity into Wyoming’s buffer that it won’t be a problem.

“When you’re meeting redemption requests, the ability to do that is really important for the perception that this token is stable,” she said. “If our ability to redeem is delayed by different factors, including our reserve management policy, or investment approach that could affect the stability of the token.”

Wyoming Banks Remain Skeptical Of Stable Token

Wyoming Banking Association President and CEO Scott Meier questioned the “back of the envelope” math that Apollo outlined during the public comments.

“I know the executive director brought up a $125 billion market, but that’s a worldwide market,” he said. “So the question is, how much does the Wyoming Stable token think they’re going to gather under that market? That could be a very, very small market. It could be large. I don’t know.”

The amount of revenue, meanwhile, could be considerably smaller than projected, Meier suggested, raising questions about how the Wyoming Stable Token will ever be able to reimburse the state for the expense to develop it.

Meier also expressed skepticism about the stability of the stable token.

“According to Moody’s, this last year, for large fiat stable tokens, it was de-pegged over 600 times,” he said. “That is a serious point, I guess, in my mind. It tells me not that this has happened, but that it will happen, and the question is, how often will it happen with Wyoming stable tokens? So, I think that’s a big issue that we’re concerned about.”

Meier also disagreed with a comment Gordon made, in which the governor stressed that the token won’t meet federal definitions of being a security.

“I’m not sure the SEC will agree,” he said. “And I don’t think our representation that this is not a security will in fact carry the water. I think the SEC will make that determination. So, based on that, maybe that’s why I see the unusual request under the financing that they have $2 million in there for litigation.

“I’ve never seen a business plan that starts out by saying we need some seed money, but understand that the first thing we’re going to have to probably do is start considering whether we have to litigate on our business plan.”

Meier's last point was related to whether stable tokens could be used to fund terrorism.

“When it comes to stable tokens along with cryptocurrency and mixers, we don’t know anything about what’s going on out there,” he said. “So all I know is that North Korea could come up here and say, ‘We want to redeem these stable tokens,’ and I don’t think we’d have anything to say but OK.”

For all of these reasons, Meier suggested that the proposal to create a stable token is creating risks not only to Wyoming, but also to its community banks.

“I don’t know how this all fits in,” he said.

Gordon, Meier Hope Stable Token Can Help Community Banks

Gordon told Meier one of his biggest concerns is for community banks, which he said are under a great deal of pressure right now.

“If you look at what the FDIC is doing if you look at what the Fed is doing to regional banks at this point, that’s not far behind that they will do that to community banks,” he said. “And I think the resources for regional banks are probably easier to meet the challenges that the Fed is putting in them and it’s certainly de minimus for large, very large institutions.”

Keeping the full spectrum of banking options open is a chief concern, Gordon said.

“I think the biggest concerns we have are not from, you know, digital assets,” he said. “But I think the whole system is arrayed against community banks at this point, and I’m hoping that Wyoming can stand firm in protecting them.”

That was a point Meier said he agrees with.

“I think that this kind of industry, along with Central Bank digital currencies and everything that’s out there are designed to get rid of our banking system, and our two-tier banking system that we have with large banks and small banks works very, very well,” he said. “And I brought this up last time — the concern that we have is that the money, whatever is being used, even if it, through legitimate purposes, takes away from those people who need that, need those resources; the shoe store, the pizza parlor, the auto dealer that needs our community banks.”

Commissioner and Wyoming Treasurer Meier, meanwhile, suggested that probably 25% of the Wyoming Stable Token’s liquidity pool will have to be cold hard cash.

“I thinking of some way that we could maybe do a cash liquidity pool that every bank would share in,” he said. “We’re required to have liquid deposits, and if we can figure out a way to have liquid deposits in community banks, I think that would benefit us, benefit the state and benefit the community banks.”

Renée Jean can be reached at

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Renée Jean

Business and Tourism Reporter