Freeze, Seize, and Sidelined: Cardano Founder Slams Wyoming’s Stablecoin

In a fiery livestream, Cardano founder Charles Hoskinson didn’t hold back as he slammed Wyoming’s secretive stablecoin project, criticizing its lack of transparency and undisclosed “freeze and seize” capabilities that he claims unfairly excluded Cardano from the bidding process.

• Charles Hoskinson criticizes Wyoming’s stablecoin for lack of transparency
• Undisclosed “freeze and seize” requirements exclude Cardano
• Hoskinson likens Wyoming’s stablecoin to a CBDC, warns of privacy issues
• Economic feasibility questioned due to modest budget and competition

On February 4, 2025, Charles Hoskinson, the visionary behind Cardano, took to the airwaves to voice his concerns about Wyoming’s state-backed stablecoin project. “We were told it would be an open process and we would know ahead of time what the product requirements would be,” Hoskinson stated. “Instead, they hid the Product Requirement Document (PRD, a document that outlines the specifications of a product)… and decided to qualify people themselves.” The hidden PRD contained undisclosed features that would allow the state to stop transactions and take control of funds—a capability Hoskinson refers to as “freeze and seize”—which Cardano could have met if disclosed in advance.

Hoskinson’s critique drew a sharp comparison between Wyoming’s stablecoin and a Central Bank Digital Currency (CBDC, a digital currency issued by a central bank). “If you hold Wyoming stablecoin, know that everything you buy is monitored and tracked,” he warned. “At any given time, civil asset forfeiture… they can just seize it.” This ability for government surveillance and control over citizens’ funds is what Hoskinson fears could lead to privacy violations similar to those posed by CBDCs.

Economically, Hoskinson questioned the project’s viability. With a budget of only $5.8 million, Wyoming’s stablecoin pales in comparison to the revenue generated by established stablecoin issuers like Tether and Circle, both of which reportedly made around $13 billion last year. “You have a $5.8 million budget… and at the end of the day, you’re sitting on a CBDC in Wyoming,” Hoskinson remarked, highlighting the intense competition and the project’s modest financial backing.

As a resident of Wyoming, Hoskinson also expressed concern for the state’s taxpayers. “They don’t deserve that,” he said of Wyoming’s workforce. “This is not how procurement works… not how anybody should operate.” His personal stake in the state’s economic health underscores his criticism, emphasizing the potential misuse of public funds.

Instead of building a new stablecoin from scratch, Hoskinson suggested a more practical approach. He proposed that Wyoming could “white label” an existing stablecoin infrastructure, which would allow the state to leverage established technology without the hefty development costs. This strategy could potentially benefit Wyoming through revenue sharing without the risks associated with creating a new stablecoin.

At the time of the livestream, Cardano was trading at $0.75, a reminder of the real-world implications of such policy decisions on cryptocurrency markets.

Privacy Concerns

The “freeze and seize” feature of Wyoming’s proposed stablecoin raises significant privacy concerns. This capability allows the state to monitor and control transactions, which could be likened to the surveillance potential of a CBDC. Hoskinson’s comparison underscores the fear that such a system could undermine financial privacy, a cornerstone of decentralized cryptocurrencies like Bitcoin and Cardano.

Economic Viability

The economic feasibility of Wyoming’s stablecoin project is under scrutiny. With a budget of $5.8 million, it faces stiff competition from established players like Tether and Circle, which dominate the stablecoin market with billions in revenue. Wyoming’s plan to back the stablecoin 102% with US dollars and short-term treasuries aims to mitigate the risk of depegging, but the modest budget may not be enough to make a significant impact in the competitive landscape. The details of the project’s budget can be found in the Wyoming state-backed stablecoin project details.

Alternative Solutions

Hoskinson’s suggestion to white-label an existing stablecoin infrastructure presents a pragmatic alternative. By partnering with established stablecoin issuers, Wyoming could benefit from their technology and market presence, potentially sharing in the revenue without bearing the full brunt of development costs. This approach could offer a more efficient path to achieving the state’s goals of fostering cryptocurrency innovation.

Local Impact

As a Wyoming resident, Hoskinson’s criticism carries a personal weight. He is concerned about the potential misuse of public funds and the impact on local taxpayers. “They don’t deserve that,” he emphasized, highlighting his belief that the state should prioritize transparent and fair procurement practices that benefit its citizens.

Broader Implications

Wyoming’s stablecoin initiative is part of its broader ambition to become a hub for cryptocurrency innovation. The state has been proactive in embracing blockchain technology, aiming to diversify its economy beyond traditional industries like fossil fuels. However, the path to becoming a crypto-friendly state is fraught with challenges, as evidenced by Hoskinson’s critique and the competitive dynamics of the stablecoin market. Despite these challenges, the project aims to generate social benefits, with interest from the reserve assets slated to be donated to public schools. The economic feasibility of this initiative has been a subject of academic research, as seen in studies on Wyoming Stablecoin economic feasibility.

Counterpoints and Balance

While Hoskinson’s critique is sharp and well-founded, it’s important to consider potential reasons behind Wyoming’s approach. The state may see the need for “freeze and seize” capabilities as a necessary tool for regulatory compliance and to combat financial crimes. Additionally, Wyoming’s initiative can be viewed as a signal to the crypto industry of its willingness to innovate and experiment with new financial technologies, even if the economic impact may be limited, as suggested by experts like Lee Reiners from the Duke Financial Economics Center. Discussions around Hoskinson’s criticism can be found on platforms like Reddit.

Conclusion

Hoskinson’s critique of Wyoming’s stablecoin project highlights the tension between blockchain platforms and government initiatives. While innovation is commendable, transparency, privacy, and economic feasibility must remain at the forefront. As the crypto landscape evolves, the balance between these factors will be crucial in shaping the future of financial technology.

Key Takeaways and Questions

• What was Charles Hoskinson’s main criticism of Wyoming’s stablecoin project?

  Hoskinson criticized the project for its lack of transparency and undisclosed “freeze and seize” requirements, which he believes unfairly excluded Cardano and other platforms from bidding.

• How did Hoskinson compare Wyoming’s stablecoin to a CBDC?

  He likened it to a CBDC due to its “freeze and seize” feature and the ability to monitor transactions, which he argued undermines financial privacy.

• What economic challenges did Hoskinson highlight regarding Wyoming’s stablecoin?

  He pointed out the project’s modest $5.8 million budget and the intense competition from established stablecoin issuers like Tether and Circle, which generate billions in revenue.

• What alternative did Hoskinson suggest for Wyoming’s stablecoin project?

  He suggested that Wyoming could “white label” an existing stablecoin infrastructure rather than build its own, potentially benefiting from revenue sharing without significant development costs.

• How did Hoskinson justify his criticism from a local perspective?

  As a resident of Wyoming, he expressed concern for the state’s taxpayers and the potential misuse of public funds, arguing that the project does not align with proper procurement practices.