March 29, 2023
Wyoming Stable Token Act Enacted Into Law
March 17, 2023, Wyoming became the first state to enact a bill allowing it to create its own stablecoin. After vetoing the original version of the bill in March 2022, Governor Mark Gordon allowed the updated version SF0127 – Wyoming Stable Token Act (the Act) to go into law, albeit without his signature.
Summary of the Act
The stable token and the corresponding trust account that backs the stable token established by the Act will function as follows:
An individual stable token is a virtual currency representation of US $1.
A token shall be redeemable upon demand for US $1 (except in the event that the US short-term Treasury rate falls below zero, or the value of the assets held in the trust account falls below US $1 per stable token outstanding).
The notional value of all outstanding tokens will be held 100% in the newly-established Wyoming stable token trust account(although the trust does not create any fiduciary duty between the state and token holders).
Funds held in the trust will be invested only in low-risk short-term US Treasuries.
Any investment earnings generated above 102% of outstanding token value will be deposited into a separate Wyoming stable token administration account, to cover operational costs and fund other state endeavors.
The Act establishes a Wyoming Stable Token Commission with the ability to issue and oversee the program.
The Act provides that the Commission “shall endeavor to issue at least one Wyoming stable token not later than December 31, 2023.” Startup costs of US $500,000 will be provided by the Wyoming state treasury for issuing and administering the tokens, although such funds are expected to be repaid, presumably from anticipated interest income.
Governor’s Reaction
Governor Gordon sent an open letter to the secretary of state lauding the Act as a significant contribution to Wyoming’s financial ecosystem, and furthering Wyoming’s leadership position in the digital asset world. He did, however, raise some concerns about the thoroughness and feasibility of the plan. He noted that running simply on a “poorly thought through build-it-and-they-will-come scheme” — is a perilous path forward, especially considering recent stablecoin and digital asset market failures. He was also concerned that startup costs may exceed the initial US $500,000 allowance, and that details are lacking on the size, qualifications, and cost of the required support staff.
Finally, he reiterated an objection raised in his veto of the Bill in March 2022, that the stable token may face state constitutional challenges (namely, when Wyoming taxpayers fund and administer a token project, and tokens may be traded beyond state boundaries by non-citizens, it may run afoul of the state constitution’s prohibition on the state funding any individual, association, or corporation, except for necessary support of the poor).
Nevertheless, he was comfortable that the Act made sufficient progress from the previously vetoed bill to become law this time around, and was hopeful that a successful project would contribute to “vital progress” as well as “significant revenue” for the state.
link to complete article
https://www.jdsupra.com/legalnews/wyoming-stable-token-act-enacted-into-8595617/