Wyoming's Stable Token Initiative: Pioneering State-Issued Digital Assets by Anthony Apollo

okay up next we have Anthony Apollo the executive director of the Wyoming stable token commission there we go while I figure out the clicker we'll leave the disclaimer up here so just to level set before we get into this whole presentation there has not been a Wyoming staple token issued yet we have not selected a blockchain to launch on and nothing I say could be considered Legal Financial advice also I do not speak for the commission itself I am the executive director of the commission but we'll talk about that more here so again my name is Anthony Apollo I've been serving as the executive director of the Wyoming stable token commission since September of 2023 so just under 18 months at the initi of my career I did work for the traditional Finance sector both at KPMG and erston young predominantly helping GBS restructure after the global financial crisis 2008 in alignment with the Dodd Frank act when you get into the big Banks and see how they work or sometimes don't work all that well and you learn about Bitcoin and ethereum at the same time this would have been fall of 2015 uh you start pivoting into that direction so made that my career starting in 2017 joined consensus to work on a early attempt at tokenize and decentralize intellectual property I at one point worked with a professional basketball player named Spencer dwy uh then on the Brooklyn Nets now on the Dallas Mavericks do a tokenized debt security with stable token payouts on a monthly basis to investors and then most recently was working on a platform called rensa with my brothers which was a digital multimedia attribution tool that had real-time payouts to content creators royalties cifi and smart contracts Etc uh I'd moved to Wyoming to do all that work because Wyoming has built an incredible legislative framework that I'll talk about in a second but since it is that time of the year it is eth Denver I also note that I was a keynote speaker at the first eth Denver event back in 2018 we were still in the sports castle and that was talking about that project at consensus so what is the Wyoming stable token what is the commission what are we trying to do the Wyoming stable token commission Endeavors launched the first Fiat backed fully reserved stable token issued by a public entity in the United States in the first half of 20125 the Wyoming stable token or Wist will be a digital asset on a public blockchain redeemable for a dollar so that's a bit of a mouthful but what we're saying here is a state is looking to issue a stable token that looks similar to usdc looks similar to py USD may have some additional benefits to it but we do expect that this will be a domestic product an international product and on defi as well not limited to the four corners of the state of Wyoming so why is Wyoming do is why is the state getting involved with this Wyoming has a legislative framework around cryptocurrencies digital assets and blockchain Rit large that goes back to 2016 75 plus pieces of legislation have been put forth 45 plus pieces have been passed and there's actively more legislation being put on the books as we speak because it is in the midst of our legislative session right now a stable token was initially put forth as for one reason the glue between several disparate initiatives let's say you have a bill that allows you to pay your taxes with crypto we have a digital asset registry in the Secretary of State's office you are able to register your Dow under an LLC structure or more recently a Duna so when you have all of these disperate things that are digitally native and perhaps you want to transfer value between them the stable token sure seems like a great way to do that on the other hand Wyoming is a oil and gas State at some point the dinosaur bones dry up probably won't be in my lifetime but it will happen at some point and the state always needs to think about how it'll be generating revenues once that occurs and digital assets again WR large has been one thing one industry has identified as a way to bolster the state's coffers to put a little bit more specificity on it I did put this table together again wanting to demonstrate here how broad Wyoming's efforts have been in this sector there's property rights that go back several years around things like tax exemptions the digital asset registry uh critical in the state of Wyoming is privacy protection so we have the prohibition of private key disclosure that's one of my favorites you as a citizen cannot be compelled to give up your private keys in any civil or criminal proceeding we are a state we cannot compel speech that's a breach of the First Amendment uh and I'm not a lawyer so take that with the grain of salt but that is the intent and someone who looks like a lawyer is nodding in the back there so thank you appreciate that uh and of course we do have several bills in the books around entity structures corporate structures uh I did mention Dow llc's and more recently the dunas which give a formal legal backing to decentralized organizations but another great one is the special purpose depository institutions if you guys are familiar with Caitlyn long and custodia that's where she slots into all this it is essentially a bank like structure especially chartered entity that can do bank-like functions as well as custody digital assets and if you put a revenue diversification band across all of that that is where the stable token can also fit in I don't think I need to belabor the point around what stable coins are what they're doing the last presenter had similar information around comparables to Visa network but obviously stable coins have emerged as a killer app in the digital asset sector and now we'll get in a little bit to how Wyoming came into The Fray here and what this looks like so the stable token Act was passed in March of 2023 which did two very simple things it created the token commission and it gave it one remit which is to issue the Wyoming stable token the commission was initially three participants they are the governor auditor and treasurer of the state of Wyoming so to say this is a high transparency High oversight program is an incredible understatement we have three of the five elected officials are functionally running the program the governor is the chairman of the program we then brought on four subject matter advisers and again this is a little before my time but uh we did bring on a couple of smas one of whom is flavan noes who before her tenure with us was the general counsel of a little firm you may know called Circle uh and we while we started with a 500K budget uh we did get through the joint Appropriations Committee and get a $5.8 million budget approved now again that is about one 100th of what paxos raised do theirs but paxos didn't have me so we'll see how that works out we as an agency were authorized to facilitate our own procurement process which means when we need to build the stable token we're not hiring a team of 20 developers to go and do this ourselves we are going to be relying on third parties to help us build that and I'll say more about our procurement process in a moment because it's pretty much wrapping up tomorrow which is very exciting uh we clarified what assets are permitted to as underlying reserves for the stable coin it's very vanilla it's cash it's US Treasury Securities under a year to maturity US Treasury security repurchase agreements under 30 days to maturity very vanilla intended to be quite stable but still interest bearing and then interestingly we also selected nine candidate block chains we ran a exercise through a blockchain selection working group to identify which chains could support the use cases we're looking to launch on including the payments use case at a retail level so looking for Sable for networks that you know had those attributes that could facilitate that and one thing I'll quickly mention here because I don't think it's on our next slide although we certainly refer to the transparency that we have everything we do because we are a public entity is on our website if you wanted to see every determination we made around the blockchain selection you can go on our website look at here's the chains we looked at here's the criteria here's the assessment here's the backing data for it and we've been incredibly transparent in that capacity and that will continue we believe that's one of the benefits of the program we have to be incredibly transparent about everything we do all of our meetings and decision-making happens in a public forum uh and one of those meetings will be tomorrow if you want to tune in another benefit here we do over collateralize the stable token so we have a statutory responsibility to maintain a reserve greater than 102% of the notional amount of stable tokens outstanding again bit of a mouthful was it mean if we have 100 million Wyoming stable tokens issued and in circulation we should have $102 million of cash and treasuries that back it um that is to mitigate against the risk of any kind of dep pegging and again that is in statute that is the law in Wyoming and also this is meant as a public good uh when we're generating interest off of those underlying reserves and those go in those flow into the agency those dollars are not to go pay for a private jet so I could go all the cool crypto events all around the world every week uh on a quarterly basis those dollars get swept into the school Foundation Fund in the state of Wyoming so this is a way to get dollar into our ecosystem without having to increase taxes without having to uh you know open up the 19th horse racing Casino downtown without having to legalize recreational drugs and then tax those there's another couple considerations here around us debt and dollar hegemony but looking at the clock I got about four minutes so I'm going to keep moving along here in terms of use cases again we do expect to be where you see stable tokens these days at the institutional level we do see ourselves being in some of those facilities that are a bit larger and need you know cash or cash equivalence um that could be moved quite quickly from a retail perspective we do want to be facilitating that Peter peer use case as well and hopefully get people using wallets in a way that can help avoid transaction fees associated with the credit card rails and internationally we expect Wyoming staple tokens to be able to flow freely between different countries or jurisdictions important to note we are doing this issuance as a sovereign entity this is the state of Wyoming issuing the stable token it's not a bank it's not a trust it's the state and as such we're not necessarily under the jurisdiction of the EU and MAA we're not even under the jurisdiction of New York DFS and their guidance on stable coins what I will say is we will try to play nice because we do want to be adopted well in different ecosystems all over the world but we certainly have some exceptions there that make things interesting for us in terms of some challenges these some of these are just the converse side of the benefits but from a regulatory perspective while we do have the staed Act and the genius act now on the floor of the House and Senate respectfully here in the US nothing's passed yet and yet as a state we need to put rules in place for how we operate so it's incumbent on our own agency to set rules that'll dictate how we do reserves management How We Do token treatment so minting and burning redemptions potentially interdiction we have to set all of that in a public forum and that will have a 45-day public comment period on it before it becomes the rule in the state that's maintained by the agency in terms of security that is tantamount for us as is privacy we could put those in the same bucket uh we are certainly looking at recent developments around zero knowledge proofs and homomorphic encryption that we think can really bring us the front of the line in terms of of consumer privacy and from education while we all in this room may know about stable coins it is the stable Summit uh not everyone in Wyoming does and not everyone all around the world does so that'll be something we have in front of us too in terms of next steps we have finished a very exciting uh milestone for ourselves we are again looking to bring on thirdparty vendors to help us develop deploy and manage the stable token we've had a four months long procurement process s different request for proposal dozens of different vendors we just finished our interviews with qualified vendors yesterday afternoon uh I'm celebrating here today with all of you and then tomorrow when we have our monthly meeting we will be naming the vendors who scored highest on our assessment and we will look to start engaging them with contracts within the coming weeks so the goal for us is to have a Wyoming stable token out on a test net by the end of next month and by the end of Q2 I've been saying July 4th just to keep it patriotic and also because we have a 630 tax year end so to avoid anything around that um we hope to launch a fully reserved Wyoming stable token on July 4th in conjunction with these Partners uh and then we expect to expand to multiple networks one other thing we didn't capture is along the way here in terms of additional value ads one of the things that we are investigating and I will do the handwave we need a legal you know opinion on this and this is all speculative for the time being but the commission is looking into the potentiality to do a yield bearing stable token here in the US available to us customers its activity we've seen predominantly going offshore because no one really could contend with the SEC regime under Gary Gensler here in the States but we as a state may have some exemptions to Securities Law that we may look to Avail ourselves of and with three seconds left on the clock I've been Anthony Paul with Wyoming stable token commission W.O we'll see you there thank you