CHEYENNE – Although it would be later than previously anticipated, the state of Wyoming could still get its very own virtual currency.
Its value would not be subject to much fluctuation, experts predict. This could be the first government in the U.S. to issue this virtual currency.
Stakeholders generally agreed that such a financial instrument, by being linked to stable assets like cash and U.S. Treasury bills, would have a much better reputation than some of the private stable currencies. Some have recently melted down amid an overall crypto-market price correction.
Legislation that previously passed both chambers is now being revived, due to the efforts of a special panel of lawmakers from both parties and from both the House and Senate. Efforts to start Wyoming‘s own stablecoin came to an abrupt, albeit temporary, halt earlier this year when Gov. Mark Gordon unexpectedly vetoed Senate File 106, the Wyoming Stable Token Act.
As has been noted ever since the veto, even members of his own party were taken off guard, especially because legislative passage came by a wide vote margin and because the governor’s office had not given previous indications it had concerns.
Rep. Jared Olsen, R-Cheyenne, predicted that there could still be much demand for Wyoming’s own crypto dollar. Even with the recent virtual currency market tumble, a witness from the Legislative Service Office noted that altogether, stable virtual currencies are currently worth about $160 billion.
It was a productive day for the panel, which voted to work on redrafting SF 106. Among the suggestions that will be included were some from Rep. Clark Stith, R-Rock Springs.
Generally, an aide to Gordon, industry executives and lawmakers themselves agreed about the overall-slight proposed tweaks.
Some of these executives serve as advisors to the panel, including Caitlin Long, a longtime Wyoming crypto exec who helped to start Custodia Bank. She later spoke in an interview with the Wyoming Tribune Eagle.
Earlier Tuesday, lawmakers sitting on the panel also suggested ways for Wyoming to allow political campaigns to accept donations in the form of crypto.
In his March veto message, Gordon had written that he doubted the State Treasurer’s Office could handle the additional responsibility of helping to issue the stable crypto, which would be fully backed by short-term U.S. government securities and would each be redeemable for one dollar. The office had come under scrutiny for unrelated snafus in keeping track of some of the state’s billions of dollars in assets.
On Tuesday, Olsen described himself as having been “a little surprised” when he learned from state Treasurer Curt Meier that Meier was potentially okay with the veto, due to his office only having so much capacity for such projects. These were the concerns that Gordon himself had raised, in his opposition to the would-be law.
Meier responded now to Olsen that, had Meier been able to speak with Gordon about the treasurer’s proposed safeguards to implement SF 106, “that may have given him the comfort that he was seeking.”
With new finance systems coming online, among other revamps to the treasurer’s office, a top aide to Gordon signaled Tuesday afternoon that the governor could be more inclined to support similar legislation next year, which would likely be the first possible opportunity for another attempt to pass such a law. (Gordon is up for re-election this year.)
Meier suggested to the hearing of the Legislature’s Select Committee on Blockchain, Financial Technology and Digital Innovation, that, with a few possible changes, his office could implement SF 106.
“Undoubtedly, there should be no qualms at all to move forward with this” by his office, Meier told the hearing streamed from Sheridan, himself speaking by live video. He was asked at another point for reassurance by Sen. Chris Rothfuss, D-Laramie, who co-chairs the panel with Olsen. Meier replied that “I could give you the green light.”
The state treasurer’s office has done a “lot of heavy work” in recent years, made new hires and embarked on other improvements, Meier said at various points during the couple-hours-long hearing.
Meier suggested getting some outside help and advice in dealing with what could be called a Wyoming Stable Token, such as via an advisory panel of experts. He wants to “ring fence” crypto operations from the rest of his office, seeking to have “a separate custodial capacity.” He described these types of changes as “a little bit of a twink in the structure.”
Patrick Fleming, a key staffer with Meier’s office who is the agency’s chief investment officer, had some suggestions when he spoke separately to the panel, also via live video. Fleming suggested allowing for the purchase of government securities with maturity dates of less than a year.
Betsy Anderson, who is Gordon’s general counsel and deputy chief of staff, spoke on behalf of her boss at the hearing. These were the most specific public comments about the governor’s apparent hesitations.
Opening her portion of the hearing, Anderson said the veto letter “is pretty clear and we’ve actually touched on the issues” at the hearing. Olsen replied that “I don’t think the (veto) letter speaks for itself.”
Other back-and-forth occurred when lawmakers and Anderson verbally jousted on whether the aide was speaking as a lawyer who could help suggest a new draft bill, as a government adviser or in another similar capacity. She said she was speaking as Gordon’s deputy chief of staff.
“As Ms. Anderson told the committee, she is not a specialist in stablecoin/cryptocurrency legal issues,” Communications Director Michael Pearlman of Gordon’s office wrote in an email to the WTE on Wednesday.
At the time of his veto, Gordon didn’t want the treasurer’s office to “take their eyes off of the ball” of performing already required non-crypto financial work “that is critical to the state,” Anderson testified. Unlike last time around, she said that there is now more stakeholder and legislator participation. She noted that she worked in the treasurer’s office for more than a decade, and that Gordon used to be the state treasurer.
What didn’t work in SF 106, in Gordon’s view, was an “all or nothing approach” that set a Dec. 31 deadline for the state to go ahead with the stablecoin or to not issue the crypto dollar, the aide said.
“Instead of a date, the governor would encourage you to look at alternative requirements,” such as meeting other criteria, she said.
Legislators suggested there must be a middle ground between rushing versus taking so much time that another state charges ahead.
“That’s the conundrum,” Anderson said. “I wish I could say I had an answer.”
“Yesterday’s discussion was wide-ranging,” Gordon’s communications aide, Pearlman, wrote to the WTE Wednesday, although the hearing “may not have addressed every potential concern the governor might have with future stablecoin legislation.”
That the blockchain panel, which Long helps advise, unanimously agreed to explore a new version of the stable coin legislation “does suggest there is a desire on the part of the Legislature to bring this back” in the 2023 regular session, she said by phone Wednesday.
“Getting the support of the governor’s office and the treasurer’s office” is important, she added.
There was a sense that the last attempt to get SF 106 to become law “was rushed,” and it did not go through the usual blockchain committee process, the crypto executive noted. “They ran it as an individual legislator bill, which is not uncommon at all, but that did raise one of the red flags for the governor.
“I think he’ll have an opportunity to conclude that the state is more ready to do it” now, she continued. “So far, no other state has jumped ahead of us in line” by issuing a stable token.
Despite the approximately one-year delay, “I don’t know that we have actually lost time,” she said. “It gives the state the opportunity to make sure that the Is are dotted and the Ts are crossed. It’s exactly what the governor” sought. It helps ensure “that the executive branch can be in a good position to administer” a Wyoming Stable Token, Long predicted.
Rep. Stith told the WTE that he made seven suggestions for the blockchain panel. LSO staff said they will include these in an update. He said some of these proposals were overlapping, and that the panel could discuss what he called these “conceptual amendments to the draft stable token bill for our next meeting.”
Stith would delay the stablecoin rollout by a year to Dec. 31, 2023. He mentioned some ideas that were raised during the hearing.
Another proposal from Stith, he wrote in an email, would be to “Direct the state treasurer to develop a plan of implementation that would consider a variety of factors: operational guidelines, marketing strategy and business plan, process for selecting auditing firm, qualified counsel, etc.” He would “require that any contract with a service provider ... have well-defined performance requirements.”
In case the would-be law was later found to be unconstitutional, Stith seeks to add “end of life provisions, to the extent not in (the) bill” already.