Wyoming Plans Stablecoin Despite Republican CBDC Concerns

House Majority Whip Tom Emmer (R-MN) expressed strong opposition to Wyoming's plans to issue its own stablecoin, criticizing the initiative as a form of state-issued central bank digital currency (CBDC). Emmer, a Republican, argued that any government-issued tokenized currency is essentially a CBDC, which he and many other Republicans view as a threat to user privacy and individual freedoms.

CBDCs, digital versions of a state’s fiat currency, are managed by a central issuer that could potentially freeze funds or control how these currencies are spent. Unlike cryptocurrencies such as Bitcoin or Ethereum, CBDCs lack censorship-resistance but offer full transparency, with every transaction available for scrutiny by the central issuer.

Despite the concerns, Wyoming's Republican governor, Mark Gordon, announced plans to issue a stablecoin, WYST, as early as July. Those involved in the project insist that WYST is fundamentally different from a CBDC. Stablecoins are cryptocurrencies pegged to the price of the U.S. dollar, allowing users to trade in and out of crypto without exiting digital assets completely. They also serve as dollar equivalents in markets where dollars are restricted.

Anthony Apollo, executive director of Wyoming’s Stable Token Commission, emphasized that Wyoming is committed to privacy and will implement rules to govern data collection and usage. He noted that the exact policies are still being developed and that the state may rely on a third party, such as a centralized crypto exchange, to handle data collection for WYST.

Apollo argued that WYST, being fully backed by reserves like U.S. Treasuries, does not pose an inflationary risk. He clarified that Wyoming is not a central bank and is not issuing cash, distinguishing WYST from a CBDC.

The rationale behind Wyoming's move to issue a government-backed digital asset includes potential benefits such as lower fees and flexibility in transactions, including those involving firearms. The interest accrued from the token’s Treasury reserves would also fund the state’s school system.

However, the rollout of WYST has raised questions about the role of government in issuing such a product. Apollo frequently addresses concerns about whether WYST is a CBDC during public hearings and legislative discussions.

Just weeks ago, Governor Gordon signed a bill prohibiting the development of a CBDC in the state, emphasizing Wyoming's rejection of controlled digital currency. This legislation underscores the state's stance against CBDCs while pursuing the issuance of WYST, highlighting the complex interplay between state initiatives and federal concerns over digital currencies.