Wyoming’s WYST: A State Stablecoin or CBDC in Disguise?

Wyoming is set to launch its own stablecoin, WYST, as soon as July, sparking a heated debate on whether it’s a state version of a central bank digital currency (CBDC). A stablecoin is a cryptocurrency designed to maintain a stable value, often pegged to a currency like the U.S. dollar. House Majority Whip Tom Emmer (R-MN) has criticized this initiative, while Wyoming officials, including Governor Mark Gordon and Anthony Apollo from the Wyoming Stable Token Commission, argue that WYST is not a CBDC and is meant to offer privacy and lower transaction fees.

• Wyoming plans to launch WYST in July.
• Tom Emmer labels WYST a state CBDC.
• Wyoming officials assert WYST is not a CBDC.
• WYST aims to offer lower fees and privacy.
• WYST is backed by U.S. Treasuries.
• Wyoming prohibits CBDC development.

The Launch of WYST

Wyoming is at the forefront of blockchain innovation, and its latest move is the launch of WYST. This stablecoin aims to revolutionize digital currency transactions by offering lower fees and enhanced privacy. Currently, WYST is in its testing phase on seven blockchain testnets, including Ethereum, Solana, and Avalanche. A blockchain testnet is a platform where developers can test their applications before going live. This initiative is a bold step, reflecting Wyoming’s commitment to digital currency innovation.

Tom Emmer’s Opposition

House Majority Whip Tom Emmer isn’t just skeptical; he’s vehemently against WYST, calling it a state CBDC and nothing less. A CBDC, or central bank digital currency, is a digital form of traditional money issued by a central bank. Emmer’s stance is part of a broader narrative within the Republican party and across the U.S., where government-issued digital currencies raise concerns about privacy and control. He states,

“I respect the vote of the Wyoming people, however, I personally am vehemently against any government issuing a tokenized version of its currency.”

His opposition is rooted in a deep-seated distrust of government overreach in the financial sector.

Wyoming’s Defense

Despite Emmer’s concerns, Wyoming officials are pushing back hard, insisting WYST is the digital equivalent of the U.S. dollar, not a CBDC. Governor Mark Gordon and Anthony Apollo emphasize the state’s commitment to privacy, stating,

“Wyoming cares significantly about privacy. We’re going to have rules in place about what we can and can’t collect, how we can treat that data, and how we can act on that data.”

Apollo further clarifies,

“Wyoming is not a central bank. We are not issuing any cash.”

The state’s approach to data handling involves specific rules, potentially involving a third party like a centralized crypto exchange, which aims to balance innovation with privacy concerns.

Potential Economic Impact

The launch of WYST could have broader economic implications for Wyoming, potentially increasing efficiency in financial transactions and benefiting the state’s economy. Wyoming’s stablecoin is not just about the money; the interest generated from WYST’s reserves will be directed to the state’s School Foundation Fund, adding a public utility component to the initiative. This move could provide a new revenue stream for education, showcasing Wyoming’s innovative approach to public finance.

Technical Details and Privacy

WYST promises lower transaction fees and greater flexibility, even for sensitive purchases like firearms. By being fully backed by U.S. Treasuries, WYST aims to shield itself from inflationary risks associated with government-issued digital currencies. Wyoming’s emphasis on privacy and its commitment to transparency are evident in its public smart contract addresses and an open call for alpha testers. However, the potential involvement of a centralized crypto exchange for data handling could raise concerns among privacy advocates, highlighting the tension between innovation and privacy.

National Context and Interoperability

The launch of WYST coincides with national discussions on stablecoin regulation, highlighted by updates to the STABLE Act. Wyoming’s initiative, facilitated by LayerZero Labs’ Omnichain Fungible Token (OFT) Standard, underscores the state’s commitment to interoperability and scalability across multiple blockchains. This move signals Wyoming’s ambition to put the dollar on-chain, a vision that Simon Baksys from LayerZero Labs believes is indicative of where finance is heading. The state’s approach to digital currency is nuanced, as evidenced by its recent legislation prohibiting the development of a CBDC within Wyoming.

Key Takeaways and Questions

• What is Wyoming’s stablecoin, WYST, and when is it planned to be launched?

  Wyoming’s stablecoin, WYST, is planned to be launched as soon as July. It is designed to serve as a digital equivalent of the U.S. dollar, offering lower fees and greater flexibility in transactions.

• Why does Tom Emmer oppose Wyoming’s stablecoin plan?

  Tom Emmer opposes Wyoming’s stablecoin plan because he views it as a state version of a central bank digital currency (CBDC), which he is vehemently against.

• How does Wyoming differentiate WYST from a CBDC?

  Wyoming differentiates WYST from a CBDC by emphasizing that it is not issued by a central bank, is fully backed by reserves like U.S. Treasuries, and focuses on privacy with specific rules on data handling.

• What are the potential benefits of WYST according to Wyoming officials?

  According to Wyoming officials, WYST could offer lower fees and greater flexibility in transactions, including for sensitive purchases like firearms, while also prioritizing user privacy.

• What recent legislative action has Wyoming taken regarding CBDCs?

  Wyoming recently passed legislation prohibiting the development of a CBDC in the state, signaling a clear stance against central bank digital currencies.