The state of Wyoming is planning to launch a US dollar backed stablecoin, WST, in the first quarter of 2025. While this is breaking news, the project has been in the works for some time. In March the state passed the Wyoming Stable Token Act, which the governor signed into law the same month.
When we first heard of the stablecoin, we wondered whether Wyoming Municipal bonds would form part of the reserves and assumed the target was for payments within the State. However, the aim is usage throughout the United States and the bonds will be backed by cash, US Treasuries and reverse repos.
The legislation stipulates that the Treasuries can’t be more than 365 days in maturity, which is longer than the typical 90 days. The longer the maturity, the more the bond value can fluctuate owing to interest rate changes. There’s still nothing stopping them from sticking to 90 days.
Additionally, the Act stipulates a maximum of 30 days for reverse repo arrangements, in which the stablecoin trust lends cash to banks in exchange for Treasuries as collateral. Stablecoins such as Circle’s USDC typically use reverse repos overnight.
Notably, the legislation requires the creation of a stable token trust account. “By creation of this trust, the state does not create any fiduciary duty to token holders,” according to the statute.
A stablecoin for use beyond Wyoming
An analysis of the potential size of the stablecoin predicted limited adoption within the state. According to a report by the University of Wyoming (source not verified)*, if the stablecoin is only used within Wyoming it would have a market capitalization of $91,468. If used throughout the United States, it would be $118.4 million. The annual potential revenue on that issuance is around $5 million (as of late 2023).
Hence, perhaps it’s not a coincidence that the initial budget of the Wyoming Stable Token Commission is $5.8 million. The plan is to invest the interest in state public goods such as schools.
“It is clear to me that digital assets are going to have a future,” Governor Mark Gordon told CNBC during the Wyoming Blockchain Symposium. “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 home to Custodia Bank, which has battling to get a Federal Reserve Account.
From comments made during the CNBC interview, Solana might be the blockchain used for the initial stablecoin issuance, although it aims to use several platforms.
The State of Wyoming has bigger plans, with the stablecoin being the first step. “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,” Flavia Naves, a commissioner at the Wyoming Stable Token Commission told CNBC.
