Wyoming’s Stablecoin Billed as Yield-Bearing Alternative to CBDC Control

Wyoming isn’t far from becoming the first U.S. state to issue its own stablecoin, moving closer to a potential showdown with Washington over how its dollar-pegged token should comply with certain restrictions signed into law last week after passage of the GENIUS Act.

The Cowboy State, which is historically suspicious of the federal government, could push back against requests to seize or freeze funds on-chain, people close to the introduction of the Wyoming Stable Token (WYST) told Decrypt, speaking as individuals.

The landmark bill requires financial institutions to issue stablecoins with “procedures to block, freeze, and reject specific or impermissible transactions,” but as a state-issued token, they say some rules may not apply to WYST, including restrictions on offering a yield.

“We are confident that we can issue yield on our stable token,” Wyoming Democratic State Senator Chris Rothfuss, who chairs the state’s Select Committee on Blockchain, Financial Technology, and Digital Innovation Technology, told Decrypt. “We haven’t necessarily decided that we will [enable WYST yield], but there’s a lot of favorability towards it.”

The feature won’t be enabled when WYST debuts later this year, but it is being implemented, Rothfuss said, noting that there are still logistical questions that lawmakers are working through. The project’s main goal is to use funds generated to fund Wyoming’s school system.

Rothfuss said that Wyoming lawmakers are considering other elements of the GENIUS Act, a comprehensive framework for regulating stablecoins that’s expected to unlock additional participation, and competition, within the $280 billion industry dominated by Circle and Tether. 

Although the bill has been portrayed by some spectators as a stamp of approval for the crypto industry’s legitimacy, some lawmakers fear that the legislation could ultimately erode Americans’ financial sovereignty, including Rep. Marjorie Taylor Greene (R-GA).

“This bill regulates stablecoins and provides for the backdoor Centralized Bank Digital Currency,” she said on X last week. “This will open the door to move you to a cashless society and into digital currency that can be weaponized against you by an authoritarian government.”

CBDCs are centralized, digital versions of fiat money. Although they are similar to stablecoins, they are not issued by private companies on public networks, prompting concerns among some lawmakers, including House Majority Whip Tom Emmer (R-MN).

In March, Emmer told Decrypt that the Wyoming Stable Token amounts to a state-backed CBDC. Anthony Apollo, executive director of Wyoming’s Stable Token Commission, responded by saying that WYST is an entirely different type of product. He noted, for example, that WYST is backed by U.S. Treasuries, while a government could mint a CBDC out of thin air.

In a recent interview with Decrypt, Apollo said the Commission has “the same concerns that any issuer will have about the potential nefarious use,” and it is trying to onboard blockchain analytics firm Chainalysis to monitor for illicit activity, alongside open-source intelligence firm Inca Digital.

Still, Wyoming’s Select Committee on Blockchain wrote in a letter earlier this month that the Commission must “resist pressure to act as a political or financial gatekeeper,” considering “heightened standards” imposed by the United States and Wyoming Constitutions.

Apollo underscored the Commission’s obligation to uphold constitutional protections as a distinct driver for WYST compared to hundreds of other stablecoins.

“We have a big delta from incumbents, who could just change their policies and say, ‘We can freeze your assets if you are trying to buy firearms,’” he said. “We have to have freeze and seize capabilities, but we can’t activate those capabilities unless we have a valid court order.”

That sentiment was echoed by Rothfuss, who noted that Wyoming’s ability to navigate federal requests in a nuanced way has long been viewed by the state’s lawmakers as a positive.

“We are not faced with the same obligation to comply with a federal request that a corporation would be faced with,” he said. “We have sovereignty, so when the government is in opposition, […] they can’t just send us a cease and desist letter and start arresting people.”

U.S. President Donald Trump, after skewering the notion of a digital dollar on the campaign trail, signed an executive order earlier this year prohibiting federal agencies from working on CBDCs. That was despite repeated affirmations from Federal Reserve Chair Jerome Powell that the U.S. central bank isn’t interested in issuing one for everyday payments.

As presidential hopefuls, Florida Governor Ron DeSantis and U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. also railed against the potential dangers of CBDCs. DeSantis specifically highlighted consumer goods like red meat or gasoline.

Historically, the Cowboy State has had a complicated relationship with Washington, given that the federal government owns 48% of the state’s surface land. That has led to conflicts over resources and what some Wyomingites describe as a “tall fence.”

WYST is currently undergoing a pilot program, but the token is expected to debut in August at the Wyoming Blockchain Symposium, on at least one network. Current candidates include Ethereum, Solana, and Avalanche, among eight other networks.

Wyoming is currently testing WYST’s ability to facilitate real-time payments to government contractors using an Avalanche-based protocol developed by blockchain startup Hashfire. Hasfire CEO John Belitsky, who also serves as a subject matter advisor to the Commission, told Decrypt that other states may eventually join Wyoming, but its philosophy cannot be copied.

“Wyoming is a constitution-loving [and] legally un-opinionated state,” he said. “Other states can [launch their own tokens], but are they going to corporate with overreaching federal agencies?”