The confusion from the BTC-loving US state of Wyoming may be perfect. When a state issues a digital currency, it is generally referred to as a central bank digital currency (CBDC), since this is the central bank’s decision. Stablecoins, on the other hand, are just tokenized derivatives that track a fiat currency or other underlying asset and are only issued by corporations, banks, or blockchain protocols. That’s the basic understanding so far.
But now the small American state would like to issue a stablecoin detached from the American central bank Fed. A novelty in tokenized money history. As has been the case several times in recent months, Wyoming is thus setting new standards in the USA when it comes to crypto adoption.
The Wyoming Stable Token Act
the Wyoming Stable Token Act was submitted by Senators Chris Rothfuss and Tara Nethercott and Reps Mike Yin and Jared Olson on February 17. This is intended to give the state’s highest financial authority the opportunity to issue a US dollar stablecoin this year. The stablecoin should also be able to be exchanged 1:1 for the “Fed US Dollar” at any time. This would make it the world’s first purely government-owned stablecoin. What the American central bank thinks of this is not known. In any case, she shouldn’t be too excited.
State stablecoin: Not fish, not meat
A government stablecoin would represent an intermediate stage between a private stablecoin and a central bank digital currency (CBDC). A lack of trust in private providers such as Tether Limited could thus be effectively overcome. After all, an American state is more likely to provide reliable US dollar cover than an unregulated cryptocurrency company based in offshore financial jurisdictions.
So the Wyoming stablecoin could offer a bridge solution until the Fed issues a digital US dollar. So the project would be born with an expiration date unless other reasons for keeping it are found.
Wyoming as America’s crypto hot spot
Above all, such a stablecoin should benefit the domestic crypto industry. Nowhere else in the USA is politics as crypto-affine as in Wyoming. Be it that the first banking license was awarded to a pure crypto financial service provider (Kraken), Decentralized Autonomous Organizations (DAOs for short) can be set up fully regulated or that you can use BTC and Co. to pay your taxes.
Wyoming is to the USA what Crypto Valley Zug (Switzerland) and the Principality of Liechtenstein are to the DACH region. Next to Kraken For example, Cardano ended up there for his research projects, as did Ripple Labs. A state stablecoin would also give these companies an additional tool to handle state-legitimized stablecoins and test their crypto use cases.
location policy is decisive
The main argument should therefore be found in location marketing. A small state like Wyoming can benefit disproportionately from the rapidly growing crypto industry. A separate stablecoin would certainly be very beneficial to this image.
In addition, smaller use cases are also conceivable that would emphasize the smart contract capability of digital money. For example, a state could program discounts that apply to certain services when paying with the stablecoin.
Stablecoin experiment with strong signal effect
Even if one can still argue about the benefit at the moment and this is not immediately apparent, the signal effect that the project could have is still very important. If it were to be implemented, the message would be sent that it is also okay for a state to question existing monetary regimes. We need a new openness in structuring our money, which is made possible by new technologies, above all blockchain technology.
The fact that this is an economically and democratically stable jurisdiction makes the money experiment particularly attractive. Of course, it is two different things whether you introduce BTC as a national currency like El Salvador or just a central bank derivative in token form as Wyoming. Nevertheless, Wyoming should also make other states aware that new forms of money cannot be introduced just out of desperation – as was the case in El Salvador. Even if no greater benefit prevails at the beginning, the experiment has been more than worth it simply through the learning effect and the adoption of token infrastructures. It is therefore to be hoped that the proposed stablecoin project will be implemented in Wyoming.
After all, the entire crypto sector benefits from this token establishment. If fears of contact with the new medium tokens are reduced and better and better regulated infrastructures emerge, the more likely the population will buy BTC or participate in staking other cryptocurrencies.