The stablecoin world just got another layer that adds a twist to what is taking place.
Over the past few months, we periodically touched upon the WYST, the stablecoin that was being developed by the state of Wyoming in the United States. This was the first to be issued by a state government, something that alters any CBDC plans.
According to reports, the stablecoin is now live although it is not open to public use due to regulatory issues. Once clarified, the stablecoin could be used anywhere where Visa is accepted (which is most retail locations in the US).
This is a big step forward.
In this article we will layout what is taking place, based upon the information provided. We will also frame this against the backdrop of the entire stablecoin market.
WYST is dead.
That is misleading because it was never alive. It was, however, believed to be the name of the coin offered by the state. Instead, we are seeing the release of FRNT.
The Wyoming Stable Token Commission, a body authorized by the US state to issue a stablecoin, announced the mainnet launch of the Frontier Stable Token (FRNT) stablecoin.
It is a token that is being released in alignment with the ongoing structure of stablecoin backing, i.e. highly liquid US Treasuries and cash. In fact, this puts it in compliance with the recent passage (and signing into law) of the GENIUS Act.
The difference is a state is under no obligation to comply with that legislation, at least that is what the representatives belief.
The FRNT stablecoin is a fully-collateralized digital token backed by short-duration US Treasury bills and US dollars, with a statutorily mandated 102% reserve requirement, the commission said in an announcement on Tuesday.
As we can see, the over collateralization is a new twist. That means much of the first year interest payments simply go to cover this.
It is, nevertheless, a way for the state to make some money since it will get the yield on the T-bills is holds.
The advantage of this token is that it will be widespread, being placed on a number of blockchains to start.
According to CryptoAmerica host Eleanor Terrett, the FRNT is now live on seven blockchains, including Ethereum, Solana, Arbitrum, Avalanche, Polygon, Optimism and Base.
These are some of the most popular EVMs, showing the state is on top of things.
At the same time, acceptance will follow Visa.
According to an announcement shared by Avalanche developer Ava Labs, Wyoming’s FRNT stablecoin will be available for use anywhere Visa is accepted.
The supported payment channels include major mobile payment and digital wallet services such as Apple Pay and Google Pay, as well as physical cards.
Based upon what we are seeing here, this is a token that could get some traction.
The United States appears to be against a CBDC. There is legislation that would ban it by law, although that has yet to pass.
So far, The Fed, under Chairman Powell, showed no inclination of moving in that direction. There is some debate whether it is even legal under the Federal Reserve Act.
That said, state issued stablecoins are a barrier to a CBDC. Many outside the United States might not understand this but states' rights is a big deal. This means the federal government can be limited in what is can do.
Of course, Federal law eclipses state law in general. That does not mean, however, that the Federal Government can simply step on the toes of the states. There is a long history of court decisions regarding where the states have dominion.
Does this include currency? It is a grey area, one that will likely be contested.
The best path to follow is for other states to duplicate Wyoming and bring out their own stablecoin. This would pit a group together against the Feds.
In my view, the key is to provide people with options. A CBDC is no problem as long as other currencies can be used. A state issued coin would satisfy that.
But aren't we switching one government coin for another?
The technical answer is certainly. FRNT is run by a government entity. What makes this different is the fact that it is a smaller entity along with being one that is based upon freedom.
Wyoming has a long history of anti-Washington (DC) sentiment. The population is not into having people from across the country dictate what it can and cannot do.
FRNT is another layer in this battle. The state is acting as a trailblazer, pushing itself into the money game. It is simply using technology to usurp (or counter) the power of the federal government.
Will this become a top stablecoin?
Not likely.
We are looking at a niche market here. With the private issuers starting to line up, we are going to see some heavyweights entering. My guess is the likes of Citigroup and Bank of America will end up leading the charge.
Private stablecoins, backed by the banks, will take the lion's share of the transaction activity. Something like FRNT will appeal to those who believe in limited government yet still see the need for it.
As stated, the key is options. People could chose to use a CBDC in my opinion. I have no problem with the choice anyone makes. However, if forced into it since it is the sole option is no good.
FRNT offers one alternative. Couple that with the private issuers and, potentially, another couple states entering the mix and Americans will have many different options.
