Wyoming to Issue Stable Tokens Under Stable Token Act | Practical Law

Wyoming to Issue Stable Tokens Under Stable Token Act | Practical Law

Wyoming enacted the Wyoming Stable Token Act, which, among other things, creates the Wyoming stable token commission and authorizes the commission to issue Wyoming stable tokens as specified in the Act.

Wyoming to Issue Stable Tokens Under Stable Token Act

Practical Law Legal Update w-039-1185 (Approx. 5 pages)

Wyoming to Issue Stable Tokens Under Stable Token Act

by Practical Law Finance
Published on 12 Apr 2023 • USA (National/Federal)
Wyoming enacted the Wyoming Stable Token Act, which, among other things, creates the Wyoming stable token commission and authorizes the commission to issue Wyoming stable tokens as specified in the Act.
On March 17, 2023, Wyoming enacted the Wyoming Stable Token Act, which, among other things, creates the Wyoming stable token commission and authorizes the commission to issue Wyoming stable tokens, as specified in the Act.
The Act, which is effective immediately:
  • Creates the commission.
  • Defines Wyoming stable tokens as virtual currency (VC), each of which is redeemable for $1.
  • Creates the Wyoming stable token trust account in which the commission plans to deposit all funds received for the issuance of Wyoming stable tokens. According to the Act, the funds in the trust account may not be expended for any purpose other than to support the redemption of Wyoming stable tokens. The Act further states that Wyoming does not create any fiduciary duty to the token holders by creating the trust account.
  • Creates the Wyoming stable token administration account as the commission's vehicle to be used for:
    • payment of the operational costs created by the Act;
    • retention of savings in an amount consistent with rules set by the commission to provide for future expenditures under the Act; and
    • distribution of any remaining funds on a quarterly basis into the school foundation program account created by the Wyoming school finance statute (Wyo. Stat. Ann. § 21-13-306(a)).
  • Provides that any trust account earnings beyond 102% of the notional value of the outstanding Wyoming stable tokens that have been issued are to be transferred to the Wyoming stable token administration account.
According to the Act, the commission is to be governed by a board composed of:
  • The governor or the governor's designee.
  • The state auditor or the state auditor's designee.
  • The state treasurer or the state treasurer's designee.
  • Not more than four subject matter experts in VC and financial technology appointed by a majority vote of the governor, auditor, or treasurer, or their designees. The Act prohibits subject matter experts who have a conflict of interest from performing board duties or serving on the board.
The Act authorizes the commission to:
  • Issue Wyoming stable tokens.
  • Determine:
    • the overall number of Wyoming stable tokens to be issued;
    • the means used to issue Wyoming stable tokens; and
    • the maintenance and management of the Wyoming stable tokens and the manner of and requirements for their redemption.
  • Retain related professional services, if necessary, including accountants, auditors, and consultants.
  • Make and enter into contracts, agreements, or arrangements for the services of financial institutions and research, technical, and other services as necessary to implement the Act.
  • Select the financial institutions to manage the Wyoming stable token.
  • Seek rulings and other guidance from the US Department of Treasury, the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and any other relevant federal agency.
  • Employ a director and employees as the commission deems necessary to perform its duties.
The Act obligates the commission to:
  • Maintain, invest, and reinvest the funds received for issuing Wyoming stable tokens and any earnings from those investments in accordance with the investment policies the commission establishes in consultation with the treasurer and according to the Act.
  • Oversee the review and audit of the operations and transactions implemented pursuant to the Act.
The Act also provides that the commission "shall endeavor" to issue at least one Wyoming stable token no later than December 31, 2023.
In addition to the above, the director of the commission is directed to provide a comprehensive report to Wyoming's select committees on blockchain, financial technology, and digital innovation technology and to the interim committee on joint materials, business, and economic development before initially issuing any Wyoming stable tokens.
The Wyoming legislature's website provides a summary of the Act.
For more information on state virtual currency and cryptocurrency regulation, see Practice Note, Cryptocurrency and Virtual Currency Regulatory Tracker: Virtual Currency and Cryptocurrency Regulatory Tracker: State Law.