Wyoming Stablecoin

Hello, this is Charles Hoskinson. I'm making a quick video to talk about an ongoing concern that is both surprising and a bit disturbing. As many of almost two years ago, the Wyoming legislature passed yet another crypto law that initially generated a great deal of optimism and enthusiasm. This law was for the state of Wyoming to issue a stablecoin. Almost immediately after this proof of concept bill was pushed forward, many people in the Wyoming government and outside of it reached out to Input Output to ask for our advice and suggestions on how we could work with the government and how others could collaborate to build this cryptocurrency, this asset-backed stablecoin.

There was a lot of discussion about who would be on the commission and some ideas about a subcommittee structure. After meeting with people in the Wyoming government, we decided to serve on the subcommittee and provided extensive advice over almost a year and a half, participating in many meetings about what needed to be done for such a project to be successful. We discussed the ecosystem required for an asset-backed stablecoin to thrive, including issuance and redemption, compliance, technological standards, and how to compete against entities like Circle and Tether. Initially, it was a very exciting time, and many people both in and outside the Wyoming government believed that this could create a significant revenue stream for the state and allow it to build out an ecosystem in various blockchain sectors. They decided to hire an executive director by statute.

This executive director came from the Ethereum ecosystem, with some background in Polygon. From the very beginning, they made statements that the coin should be issued first in the Ethereum ecosystem, which was directly against the intent of the authors of the bill, who wanted the Wyoming-based stablecoin to be multi-chain. I was assured numerous times in private and public conversations that such a thing would happen. We advocated strongly for the functional and non-functional requirements to be published by the commission so that people who wanted to qualify for the RFP could build prototypes to demonstrate that their ecosystems could support those requirements. Initially, this appeared to be the direction the commission was pushing.

Then suddenly, the executive director and commission decided to create their own criteria and act as judge, jury, and executioner. In a very short period, through a pre-qualification process, they decided to score blockchains themselves. I guess they had the time to look at over 30,000 blockchains and ecosystems and make arbitrary decisions about what those systems could do, asserting that they were experts in each of these blockchain ecosystems, including Cardano. There was no opportunity for public comment, and no chance for appeals or rebuttals. After picking a shortlist, Cardano was excluded, with the claim that we didn’t have certain capabilities, which we actually do.

However, we were never informed that these capabilities would be necessary, so we had no opportunity to prepare a prototype. This has put the commission in a position where it has given an unfair competitive advantage to other ecosystems, and the government of Wyoming has entered the business of picking winners and losers. This is directly against good faith in state procurement and was never the intent of the people who authored the bill in the first place. I believe it is both illegal and unconstitutional against the State Constitution and the good faith of the laws of the state. It also reflects poorly on how this entire process was historically conducted and the good faith that so many people invested into it.

It's not just Cardano that was excluded; over 29,900 blockchains were also excluded in this pre-qualification process. No one in our ecosystem was given a fair chance to demonstrate that they could satisfy whatever functional or non-functional requirements the state of Wyoming cared for this project. Moving forward, there are many options, and we at IOG will pursue them at our discretion. I know several lawmakers in Wyoming are deeply disgruntled and disturbed by this behavior, and there are open questions about whether this entire project should be repealed or defunded as a direct consequence of these actions. We will see what happens and how this process moves forward, but it's disheartening to have spent a year and a half attending hundreds of meetings, producing hundreds of documents, and then being told that we didn’t even have the right to bid on an RFP.

We had a dedicated team that we built specifically to deploy an asset-backed stablecoin issued by the state of Wyoming on Cardano, as well as to work with Maestro and the Bitcoin OS, one of the first asset-backed stablecoins to launch so that Bitcoin users could utilize it with Bitcoin DeFi. I guess the state of Wyoming doesn’t consider Bitcoin a large or worthwhile ecosystem according to their own selection criteria, or one that could use a stablecoin for its DeFi layer. Other ecosystems seem to be more important according to this path forward. I'm not going to say any more on this because it's an ongoing concern and may involve litigation as a worst-case scenario. However, many people in the Cardano ecosystem are asking about this, and I am as blindsided as you are.

I fully expected that many chains would have an opportunity to participate, whether they be Holochain, Algorand, Tezos, or Dash, to demonstrate that they satisfied the functional and non-functional requirements and then bid on an RFP to build and deploy the Wyoming-based stablecoin on their chains. This gave me great hope that this could be an effective competitor to Tether and Circle and push back against how they have been shaping the markets. Instead, it seems to have been captured by the same group of people that the bill was trying to move away from. By its design and structure, it's highly unlikely that any Wyoming businesses or financial institutions will be involved in the construction of this stablecoin or in the issuance and redemption process. It will probably go to California or New York.

If it was the intention of the Wyoming legislature to pass a bill where jobs would be taken from Wyoming and given to California or New York, and if it’s the intention of the legislature for the government to compete with private industry and give an unfair advantage to certain blockchains, then there you have it. I’d like to believe that, from my time living in Wyoming and working with lawmakers there, having gotten 31 laws passed in the cryptocurrency industry, their intention is actually the opposite. Throughout my interactions with the people in the Wyoming government, I found them to be honest, trustworthy, and transparent individuals who genuinely want to see the cryptocurrency and blockchain industry grow in the state. I've also seen people with enough integrity to want to build a diverse and neutral ecosystem. They say, "Come and create some jobs, work with our institutions, whether it be the government itself, the University of Wyoming, or the people of Wyoming, and bring innovation.

" This is the first time in the history of the state that an agent of the state made an arbitrary and capricious decision to exclude people from participating and gave no one an opportunity to prove they were worthy of participation. We are not even allowed to bid on the RFP, which is quite sad. Moving forward, we will consider all options and certainly talk to many people. We will remember these things when they come up, and we will find a way to recover from this. For all the people who were excluded, we’ll see if we can find a way to get them included, or perhaps this entire enterprise should have never happened in the first place.

This is the first time the state has made a decision to step into the business of building things within our industry, and apparently, this commission has decided to pick winners and losers in that process. Living in Wyoming, in Wheatland, and having a clinic in Gillette, along with investing hundreds of millions of dollars into infrastructure in the state and creating hundreds of jobs, I’d like to believe that those investments were wise and that we will be treated fairly and that the rule of law will prevail. I hope there are still enough people in the Wyoming government and lawmakers who feel the same way and will step up and speak out when these issues arise, especially after people participated for almost a year and a half in the process and were assured every step of the way that they would be given fair consideration. Let me be clear: when an unelected bureaucrat makes an arbitrary and capricious decision about who is allowed to bid, that is not fair consideration. There wasn’t an open RFP where we bid and lost; we were not even allowed to participate.

We were told what Cardano can and cannot do and given no time or opportunity to prove otherwise. That’s not how government procurement should work, and frankly, that’s never been the case in the history of Wyoming. Moving forward, we will explore what we can do. Again, this is the last time I will publicly make a statement about this through this channel. Moving forward, we will deal with it through the established processes and political channels.

I do believe that Wyoming is still a great place to form a cryptocurrency business, and I believe there are many well-intended people who want Wyoming to be a great place for cryptocurrency businesses to thrive and prosper. There’s tremendous competition now that the federal government is removing enforcement provisions, and pro-crypto people are entering the SEC. A crypto czar is going to be appointed, which means we will see other states like Texas, South Dakota, Colorado, and Delaware start competing. If Wyoming wants to hold on to the crypto businesses that have incorporated there, they have to ensure that it is perceived as the best place, including a strong adherence to the rule of law and a government that doesn’t pick winners and losers. Otherwise, the business will go elsewhere, and that would break my heart because Wyoming needs these jobs.

The economy needs this diversity, and it should never punish the people who have invested hundreds of millions of dollars into their state and hand it to people who live in New York, California, and abroad, or into ecosystems built by people who speak Chinese, were born in Russia, and live in Singapore. This makes a lot of sense to me living in Wyoming, and I don’t think it makes sense to you either. We will get it sorted out because this is just the beginning; by no means is it the end. Remember, I live here, and I’m not going anywhere.