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Wyoming stablecoin: Are state digital currencies even possible?

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In July, the American state of Wyoming shared an open job position for the head of its Stable Token Commission. 

The executive will work alongside Wyoming’s governor, state auditor, state treasurer and four expert appointees to bring the state’s very own stablecoin to life.

While Wyoming was the first to pass a law on a state stablecoin, it isn’t the only state considering launching its own digital currency.

In April, a similar initiative was proposed in Texas, where lawmakers introduced bills for creating a state-based digital currency backed by gold.

However, the idea of state stablecoins raises many questions: How would they affect the monetary stability of fiat money and the power of the Federal Reserve? Could they be compatible with a central bank digital currency? Do people really want to return to a system with state banks printing their own monetary notes?

The Wyoming experiment

The Wyoming Stable Token Act was originally introduced in February 2022, in the midst of the crypto market crisis. The bill defines the Wyoming stable token as a virtual currency representative of and redeemable for one U.S. dollar held in trust by the state of Wyoming. Basically, the state would tokenize the federal currency on a 1:1 ratio with deposits. 

Explaining why state lawmakers took such an interest in the digital token project, Chris Rothfuss, the minority leader in the Wyoming State Senate, told Cointelegraph:

“Wyoming needs to be able to transact in a digital currency — to accept payments, to make payments, and to do so without risk. The Wyoming stable token is the solution to that challenge.”

A notable reservation in Section 2 of the Stable Token Act makes the state’s attorney general responsible for monitoring the startup phase of the token’s issuance. Should the attorney general believe it contradicts federal or state law, the project would be frozen. 

The bill also sets a deadline for the project: The commission’s director shall provide their report on the doability of the stable token no later than Nov. 1, 2023.

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Other than that, the document doesn’t specify much; instead, it establishes the Stable Token Commission with the authority to craft further details.

The legislation’s path wasn’t easy. In March 2022, Governor Mark Gordon vetoed the bill, saying he was “unconvinced” that the state’s Treasury was ready to implement the project safely.

Gordon criticized the lack of information and the cost of accounting services, blockchain development and other necessary expenses, and he was skeptical of the project’s purported benefits.

A year later, the governor applauded the effort made by legislators to enhance the document, but voiced new reservations:

“First and foremost, there was no overall plan (a ‘business plan’ for lack of a better term) or, if a plan exists, it did not appear to have been used to guide the legislators in crafting the legislation.” 

On March 22, 2023, the Stable Token Act was passed into law without Governor Gordon’s signature. Gordon recognized the state stable token’s potential to “nurture Wyoming’s reputation as a leader in the digital asset world” and deemed the improvements made by the bill’s authors enough to allow it to become law.

The era of multiple stablecoins?

Neither the U.S. Federal Reserve nor any crypto-focused legislators have reacted publicly to the Wyoming project, but it is hard to imagine any kind of affirmative response, given that the American dollar was established precisely to provide a countrywide monetary standard and bring the currency under the purview of the federal government.

So, in principle, any state token project could contradict the logic of central bank currency to a similar degree as private cryptocurrencies.

At the same time, the potential value of Wyoming’s stable token is rigorously tied to the same old American dollar, which makes it less of a separate currency and more of a state-issued financial asset, similar to the state-issued notes for specie of the 19th century.

A $40 note issued by the State Bank of Georgia in 1855. Source: Southern Style Currency

Rothfuss clarified, “We are not issuing a new currency. The Wyoming stable token is a digital representation of a U.S. dollar held in trust by the state of Wyoming on behalf of the tokenholder. We are not competing with the Federal Reserve — we are enabling a technology.”

Some observers still see a potential conflict between the states and the Fed. “Certainly, there will be a tussle between states and the federal government over the former attempting to issue their own stablecoins,” Brent Xu, CEO of Web3 bond-market platform Umee, told Cointelegraph.

But there could be a compromise in which the Federal Reserve allows states to issue stablecoins under a particular framework, he believes, noting the discussions concerning a national framework for stablecoins.

Zachary Townsend, CEO of Bitcoin-based life insurance provider Meanwhile, doesn’t see any potential problems with state stablecoins, as he believes that the very concept of a stablecoin is open to almost any entity, political or corporate, as the recent example with PayPal’s initiative has shown.

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He told Cointelegraph, “There are going to be tons of private stablecoins. If I just looked at my life and all the companies I have ‘accounts’ or ‘wallets’ or ‘balances’ with, those are going to transform to become stablecoins within a few years.”

This is something Peter Herzog, state policy lead at the Crypto Council for Innovation, can agree with. “There are a variety of models for stablecoins that involve different decisions around underlying collateral, governance and more,” he explained to Cointelegraph. For Herzog, it comes as no surprise that individual states with an active interest in crypto are continuing their experiments with new initiatives:

“Until we see a federal regulatory framework, it is likely that states continue to step in to create rules of the road to promote innovation and protect consumers.”

Cryptocurrency

LINK Explodes 18% Daily, BTC Maintains $66K as Bitcoin ETF Inflows Continue (Market Watch)

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Bitcoin’s price tapped a multi-week high yesterday at around $66,600 before it was pushed down by about a grand but has reclaimed the $66,000 level as of now.

Several altcoins have continued their recent rally, with LINK taking the main stage following a massive 18% surge.

BTC Back to $66K

The primary cryptocurrency had a tough end of the previous business week when it was brought down to just inches above $60,000. Instead of going below that coveted round-numbered milestone, though, the asset bounced off during the weekend and especially on Monday.

The bulls initiated an impressive leg-up at the start of the current week that drove bitcoin to just over $63,000. It failed there at first, dropping to $61,200 amid some Coinbase issues, but went back on the offensive on Wednesday after the US announced the CPI numbers for April.

As the spot Bitcoin ETF inflows kept increasing on Wednesday and Thursday, BTC’s price soared to a three-week high of just over $66,500. The asset retraced slightly yesterday evening but has jumped back above $66,000 as of now amid the fourth consecutive day of positive flows into those ETFs.

Its market cap remains slightly above $1.3 trillion, but its dominance over the alts has taken a hit and is down to 51.7%.

Bitcoin/Price/Chart 17.05.2024. Source: TradingView
Bitcoin/Price/Chart 17.05.2024. Source: TradingView

LINK Skyrockets

Most alternative coins turned green yesterday in a similar fashion to bitcoin. While some, such as BNB, DOGE, TON, TRX, and SHIB, are slightly in the red now, most others have kept climbing.

Ethereum and Ripple are up by 0.5-1%, which has helped the former maintain $3,000 and the latter $0.5. More gains come from the likes of SOL, ADA, AVAX, DOT, BCH, HBAR, and ICP.

However, Chainlink has stolen the show from the larger-cap alts. LINK has skyrocketed by more than 18% in the past day and now trades above $16.

The total crypto market cap has remained relatively still on a daily scale at just over $2.5 trillion on CG.

Cryptocurrency Market Overview. Source: QuantifyCrypto
Cryptocurrency Market Overview. Source: QuantifyCrypto
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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Here’s Why Chainlink (LINK) Surged by Double Digits to Monthly Highs

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Chainlink (LINK) went through a massive price surge in the past day, rising over 18% following the successful completion of a pilot program with the Depository Trust and Clearing Corporation (DTCC).

The pilot, known as Smart NAV, is an initiative aimed at streamlining the tokenization of traditional finance funds, paving the way for broader institutional adoption of blockchain technology.

DTCC Completes Blockchain Pilot Project

The DTCC, the world’s largest securities settlement system, collaborated with Chainlink and several major U.S. financial institutions to conduct the Smart NAV pilot. According to a report published by DTCC on Thursday, the project aimed to establish a standardized process for delivering and disseminating net asset value (NAV) data of funds across both private and public blockchains using Chainlink’s interoperability protocol, CCIP.

The pilot’s completion demonstrated that structured data could be effectively delivered on-chain and embedded into various on-chain use cases, such as tokenized funds and bulk consumer smart contracts. These smart contracts hold data for multiple funds and support future industry exploration and numerous downstream applications, including brokerage portfolio tools.

By integrating on-chain data delivery and creating standardized roles and processes, the DTCC found that it could enable real-time, more automated data dissemination and provide built-in access to historical data.

This innovation could power several future industry explorations and operational processes, offering benefits such as enhanced efficiency, faster settlements, and greater transparency.

Chainlink’s LINK token responded positively to the news of the pilot’s success, rising more than 18% at one point and exceeding $16 for the first time since April 12. At writing time, the token is trading at $16.5, with a daily trading volume of slightly over $1 billion, marking a 195.4% increase in the last 24 hours.

LINK/Price/Chart 17.05.2024. Source: TradingView
LINK/Price/Chart 17.05.2024. Source: TradingView

Real-World Assets Tokenization

The pilot comes amid a broader trend of tokenizing real-world assets (RWA) such as bonds, funds, and other traditional investments. Tokenization has emerged as one of the most popular applications for blockchain technology, attracting financial heavyweights such as BlackRock, Citi, and HSBC.

These institutions seek the benefits that blockchain technology offers, including operational efficiencies, faster settlements, and improved transparency compared to traditional financial systems.

Prominent financial entities participated in the Smart NAV project, including American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank.

Smart NAV is centered around providing trusted, verifiable data across blockchain networks to support business workflows. DTCC served as the data provider and governor of the on-chain solution, while Chainlink’s CCIP acted as the interoperability layer.

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Important Shibarium Indicator Jumps by 200% Amid Shiba Inu (SHIB) Price Revival: Details

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TL;DR

  • Shiba Inu’s layer-2 blockchain solution, Shibarium, saw daily transactions surge by 193%, although still below its peak activity from mid-April.
  • A 4,000% increase in SHIB’s burn rate and positive analyst predictions hint at the potential for further price gains of 20-50%.

The Latest Spike

Shiba Inu’s layer-2 scaling solution – Shibarium – continues to make great strides, witnessing a substantial increase in transaction activity. Data shows that daily transactions on the network have soared to almost 18,000, a 193% jump compared to the figures observed a day earlier.

However, the metric is far from its glory days, which were registered in mid-April. Back then, daily transactions were in the millions.

Launched in the summer of 2023, Shibarium aims to foster the development of the meme coin by enhancing scalability, lowering transaction fees, and improving speed. It blasted through numerous milestones in the past few months, while its further development is considered a bullish factor for the price of Shiba Inu.

The asset has entered into green territory as of late, with its value jumping by 9% on a daily scale and 18% monthly. Meanwhile, those interested in learning more about Shibarium, feel free to check our dedicated video below:

Additional Bullish Elements

Shiba Inu’s burn rate increase can also contribute to a SHIB rally. The metric recently exploded by 4,000%, destroying millions of tokens. 

The mechanism’s ultimate goal is to reduce the tremendous circulating supply of the token, making it scarcer and potentially more valuable in time. 

Users on Crypto X are generally quite optimistic about SHIB’s potential price movements. Such an example is the popular analyst Ali Martinez, who recently said that the asset’s price can rise by 20% should it break “the upper boundary of this descending parallel channel at $0.00002444.” Interestingly, SHIB has gone above that level during the recent market revival and now sits at $0.0000248. 

Dami-Defi was even more bullish. In case SHIB breaks out of the recently formed falling wedge pattern on the 1D time frame, its price could surge by 50%. 

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