Financial journalist disputes need for Wyoming stablecoin

POWELL — Calling cryptocurrency “a solution in search of a problem,” Pulitzer Prizewinning financial journalist Jesse Eisinger is not a fan of Wyoming’s efforts to create the first state-sponsored stablecoin.

The senior editor and reporter for ProPublica and former columnist for the Wall Street Journal said he fails to see a use for cryptocurrency and has little faith in its future.

“Why bother?” Eisinger asked.

He made the blunt comments at a gathering of Wyoming’s newspapers last week, in response to questions from Jeff Robertson, the communications director for State Treasurer Curt Meier.

The Wyoming Legislature’s Select Committee on Blockchain, Financial Technology and Digital Innovation Technology is sponsoring the Wyoming Stable Token Act (SF 127).

Stable tokens and coins are used to buy and invest in digital platforms and serve as a store of value.

The act would create a Wyoming stable token commission and authorize the minting of a yet-to-be-named stable token. It would be backed by one-for-one investments in U.S. treasury bills held in trust by the state, with the state aiming to earn interest from the investments.

The measure passed the Senate Minerals, Business & Economic Development Committee with amendments on Wednesday.

This is the second attempt for the concept. Another version of the bill passed the Legislature last year, but Gov. Mark Gordon vetoed it.

Gordon said the act had “good ideas” and was in keeping with Wyoming’s friendly environment for cryptocurrency, but he expressed concern about it adding more work for the treasurer’s office; in his veto message, Gordon said he was “unconvinced that this camel can carry even one more straw.”

However, the governor vigorously encouraged the Legislature to give the bill more thought, “one that will consult with all stakeholders, outline operational costs and concerns better and allow sufficient time for the successful implementation” of the token.

Gordon also called for the state’s need for more information technology staff dedicated to the security and dispensation of the technology, and a greater legal assessment of the currency’s use in the murky crypto regulatory environment.

Meier said he likes how this year’s bill is structured and hopes a stable token will be a money-maker.

“This proposal creates a commission that would be tasked with the implementation and management of a stable coin. In my mind, this is the best path for such an endeavor,” he said in an email. “A state-issued stable coin is the best of both worlds: potential investors know their investment in coins will maintain their value, while earnings from those investments made by the Treasurer’s Office will provide additional income to the state.”

U.S. Sen. Cynthia Lummis (R-Wyoming) has been one of the crypto sector’s most vocal allies in Washington, D.C.

She applauds the “incredible job” the Legislature has done enacting a balanced regulatory framework, according to Abegail Cave, press secretary for the senator.

“As a former state legislator, Sen. Lummis trusts the judgment of our state legislators and prefers to let them do their jobs without federal input whenever possible. Sen. Lummis is working to bring Wyoming’s legislative success to the federal level and is working hard to encourage digital asset companies to relocate to Wyoming,” Cave said.

Wyoming has sought to lead the country in relation to cryptocurrencies.

In 2020, it became the first U.S. state to approve a banking charter for an institution handling digital assets.

However, crypto remains a volatile class of assets. The current global crypto market cap is $1.05 trillion, down about 50% from last year when the first legislative attempt to create a Wyoming stable token failed.

For example, the price of one bitcoin peaked at around $69,000 in 2021, but it is currently worth about $23,000.

Most alternative coins have seen much steeper losses, with currencies tied to the once multi-billion dollar Terra blockchain effectively losing all their value last spring.

The collapse of that project and of the once-popular FTX cryptocurrency exchange — followed by the indictment of former FTX CEO Sam Bankman-Fried on fraud charges — has soured many on the sector.

Eisinger was awarded the Pulitzer Prize for his reporting on questionable Wall Street practices leading up to the 2008 financial crisis — the worst since the Great Depression.

Speaking to the Wyoming Press Association on Friday, Eisinger said he doesn’t see issues with the economy that would suggest a looming market crash or recession, but he is not a fan of the crypto sector.

This story was published on Jan. 26, 2023.