Wyoming treasury should run on blockchain — Stable Token Commission boss

The executive director of the Wyoming Stable Token Commission says the impending launch of its fully backed and compliant stablecoin could lay the groundwork for the State Treasurer’s Office to run on blockchain.

“I certainly think so. I think there is a need for transparency across government spending,” executive director Anthony Apollo told Cointelegraph, echoing Elon Musk’s call for the US federal Treasury to be put on the blockchain.

Apollo said the existing WyOpen digital platform highlighted the state’s willingness to embrace financial transparency:

“I think that’s a great starting point. But I do think having a real-time, traceable ecosystem is exponentially better,” he said.

“There should be an expectation that taxpayer funding is made readily apparent to the citizens who put those dollars forward. I’m not going to speak on behalf of any directors or other agencies, but that is my own personal opinion. I think that in Wyoming, that will go far.”

Apollo revealed that the stable token will likely hit testnet in the next six weeks and launch next quarter.

Wyoming is known for its forward-thinking approach to blockchain technology. It’s home to Caitlin Long’s digital asset bank, Custodia Bank; Cardano founder Charles Hoskinson; and Bitcoin (BTC) reserve bill proponent Senator Cynthia Lummis.

State legislators have already passed 30 pro-crypto and blockchain bills, including a legal framework for decentralized autonomous organizations (DAOs), and Governor Mark Gordon is the chair of the Stable Token Commission.

Related: US Senator Hagerty introduces ‘GENIUS’ stablecoin bill

Sui and Avalanche firms in the running

The stable token may launch on Avalanche or Sui, based on the release of a shortlist of qualified vendors at a public meeting on Feb. 14.

Ava Labs (Avalanche) and Mysten Labs (Sui) have been called in for oral interviews this week, with Bridge Ventures, LayerZero Labs and Fireblocks also on the shortlist for “token development and support.” Ava Labs, Fireblocks and Blockchain.com have been shortlisted for “token distribution and support.” Regardless of which blockchain the token launches on, the plan is for it to go multichain in due time. 

The blockchain selection process has proven controversial. A working group whittled a spec list of 25 blockchains down to nine candidates that met the commission’s criteria, with Solana and Avalanche being the top-scoring chains. However, Cardano was knocked out of contention, and Wyoming resident and founder Hoskinson took issue with the transparency of the process in an opinion piece for CoinDesk.

“Any kind of statement that we’ve not been transparent is extremely antithetical to how we’ve operated along the way,” said Wyoming Stable Token Commission’s Apollo. “We found at that time that Cardano did not have the necessary criteria for freeze and seize.”

Cardano has since demonstrated freeze and seize capabilities, and Hoskinson launched the Wyoming Integrity Political Action Committee at the end of January due to his concerns over the state’s procurement process. 

“Ordinarily, that would be enough for an appeals process, and then saying, ‘Hey, perhaps you got procurement wrong,’ but that window is closed,” Hoskinson said, according to the Wyoming Tribune Eagle. “And now the tax dollars of the state are going to go to California, New York, Singapore and other places, and no real Wyoming company will be involved in this project.”

But Apollo isn’t worried about well-funded political opponents. He said that less than a week after the PAC was announced, a proposed amendment to defund the Stable Token Commission failed to attract support.

”In totality, that amendment did not even receive a floor vote. It was withdrawn in the Senate before it even went forward. So, if the assertion here is that money is going to move the needle, Wyoming’s legislature is not for sale,” he said.

Reserves and token could offer yield

Securitize, Franklin Advisors and The Northern Trust company have been shortlisted for “reserves management,” and three of the Big Four accounting firms have been shortlisted for “internal controls.”

Apollo said a stable token has a statutory requirement to be fully backed by US Treasurys, cash and repurchase agreements and must be 102% capitalized as a “mitigant against the risk of depegging.” The commission is also exploring how to make the token natively yield-bearing.

“When we’re collecting that interest, it’s possible that some portion of that interest will be disseminated to holders of a Wyoming stable token.”

The commission has also been examining the use of zero-knowledge proofs to provide compliant privacy, as businesses are often reluctant to use a fully transparent blockchain for payments because it tells their competitors exactly how their business runs. Apollo suggested a related desirable attribute of the selected blockchain would be the ability to use a subnet or layer 2 to enable permissioned onboarding and to keep certain transactions private.

The results of the candidate interviews will be presented at the next meeting on Feb. 27, and Apollo said multiple vendors are likely to be chosen. He expects testing to begin soon, as they can adapt their existing stablecoin solutions to Wyoming’s requirements,

“By the time we get through our vendor selection process at the end of this month and we get under contract, the hope would be to pretty much turnkey a Wyoming stable token, at least onto a testnet, and start testing that out at the end of March,” he said.

Issuing a fully compliant and backed token would take a few more months, he said, with Blockchain.com selected to list the token initially.

“So, that may be the end of Q2 for the full, live, globally available version of a Wyoming stable token — one that can be deployed on DeFi, following all of our compliance checks.”

At the federal level, Senator Bill Hagerty introduced the GENIUS Act on Feb. 5 to establish a clear regulatory framework for stablecoins. Apollo said the commission has been consulting with people working on the legislation and that he is supportive.

“It’s unclear where we, as a state issuer, would net out in that legislation,” he said. “We are talking to the different teams that are involved with drafting it. We expect to have a voice in the process. I think it’s a step in the right direction to quite quickly put really any legislation in place around the crypto industry.”

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