David Paul Morris/Bloomberg
While progress on a U.S. central bank digital currency has
The Wyoming Stable Token Commission this week launched the Frontier Stable Token (FRNT), a state-issued, dollar-pegged stablecoin that is designed for what it calls “real-world” transactions.
The commission partnered with Ava Labs’ Avalanche, a blockchain platform that supports decentralized applications and smart contracts; and Rain, a global card issuing platform designed for stablecoins.
“FRNT will make government processes more efficient,” Anthony Apollo, executive director of the Wyoming Stable Token Commission, told American Banker, noting disaster recovery funding, disbursements and resource management can be improved, along with more funding for the state’s schools and other initiatives.
The state’s stablecoin comes as
“Wyoming launching its own dollar stablecoin is a watershed in several respects, which raises major public policy issues. It’s the first public entity to launch a dollar stablecoin,” Eric Grover, a principal at Intrepid Ventures, told American Banker.
What is Wyoming’s stablecoin?
FRNT is backed by short-duration U.S. Treasury bills and U.S. dollars, with a 102% reserve as required by the
Other FRNT participants include LayerZero, which supports token issuance; Fireblocks’ blockchain infrastructure; Franklin Advisers to manage FRNT’s reserves; Inca Digital, which will supply for open-source technology; and The Network Firm, which will perform for audits and monthly attestations, or the statement that reports a stablecoin’s backing assets.
In testing, FRNT supported contractor disbursements through Hashfire, a Wyoming-based company that converts contracts into digital assets to speed payments. These payments executed in a “few seconds,” according to FRNT’s release, which positions FRNT as an option for government-to-business payments.
Read more about stablecoins.
FRNT’s issuers say tax refunds, social benefits and other government payments can be put “on chain,” creating speed and efficiency, contending it can be a model for other states.
Wyoming’s stablecoin has been deployed on the Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Solana blockchains.
FRNT is available to users outside of Wyoming, and the stablecoin will have its use cases broadened in the future to potentially include remittances and other transfers, Apollo said.
The state
FRNT can generate revenue through interest earned on its reserves (held in cash and short-term U.S. Treasury bills), Morgan Krupetsky, vice president of onchain finance at Ava Labs, told American Banker in an email, adding this income can support the Wyoming School Foundation program along with other Wyoming programs.
In addition to direct interest income, Wyoming can potentially reap broader economic benefits from FRNT, including diversified revenue streams, Krupetsky said. “FRNT offers a potential source of revenue beyond the state’s traditional energy and tourism sectors.”
Wyoming has long been a crypto-forward state politically, passing more than
“Wyoming’s efforts in blockchain and digital asset regulation, including FRNT, are intended to attract businesses and professionals in fintech and related fields, such as artificial intelligence and energy,” Krupestky said. “FRNT can encourage the development of new payment systems and DeFi applications built on its infrastructure.”
FRNT puts a state’s imprimatur on dollar stablecoins, Grover said.
“The state also hopes to make money on its overcollateralized stablecoin. Presumably, it’ll try to spur adoption by paying vendors with FRNT,” Grover said. “Providing for widespread interoperability over multiple blockchains will give it a better shot at achieving widespread use.”
Is FRNT a state CBDC?
FRNT enters a rapidly growing stablecoin market. The U.S. Treasury projects the stablecion market may pass $2 trillion by 2028, up dramatically from its current level of about $260 billion.
Crypto-focused companies such as Tether and Circle have dominated that market thus far, but there’s an expectation that more financial institutions and other firms will issue stablecoins in the coming years.
“Will other states issue stablecoins? And what are their goals?” Gareth Lodge, a senior analyst at Celent, told American Banker. “Many of the states argued hard against CBDCs, yet FRNT looks very like a CBDC.”
Apollo said that while he understands the comparison to a CBDC, there are differences. “What we’re doing is almost ‘anti CBDC,'” he said, noting Wyoming does not have a central bank and is not issuing digital dollars without backing it with reserves. “We’re not conjuring dollars out of the ether.” There are also privacy protections for FRNB, Apollo said. Some of the criticisms of a CBDC included the fear that it could be used for surveillance. Wyoming’s laws ensure protection of the private user keys on the blockchain, Apollo said.
FRNB is a public option in a crowded market. There’s already a fast-expanding roster of nonbanks and banks innovating and competing in dollar stablecoins, Grover said.
“Today, while the Fed issues cash- distributed by banks, and electronic dollars for banks, most money used by consumers and businesses is issued by commercial banks,” Grover said,
Wyoming’s token also acts as a payment system, Grover said. “While the Fed runs several interbank payment systems competing with bank cooperative TCH, the private sector runs most of our payment systems, through Visa, Mastercard, American Express, Discover, Zelle, PayPal, Venmo, Cash App, and others.”
