Wyoming’s Stable Token Launch Sparks Debate Over State-Backed Crypto

Wyoming’s launch of the Frontier Stable Token (FRNT) is being hailed as a milestone for crypto, but some experts warn it raises new concerns about privacy and centralization.

FRNT, a stablecoin backed by U.S. dollars and Treasury bills and built on Avalanche, launched on mainnet Tuesday, Aug. 19, at the SALT Wyoming Blockchain Symposium. The token can now be spent anywhere Visa is accepted, making it the first U.S. state-backed stablecoin available to consumers.

FRNT initially supports seven blockchains – Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Solana.

While the launch marks a big step for crypto adoption, it has raised concerns about a domino effect that could result in a wave of government-issued digital dollars.

‘Surveillance on steroids’

This concern has already reached Congress, where lawmakers are considering restrictions on federal digital currency plans through the Anti-CBDC Surveillance State Act. Passed by the House in July, the bill would ban the federal government from creating a central bank digital currency (CBDC) and using it for monetary policy.

“The scary part is whether D.C. and the Fed take this as a green light to roll out their own fully controlled coin,” Kadan Stadelmann, CTO at Komodo, told The Defiant. “A federal CBDC would be surveillance on steroids. That’s the nightmare scenario, a coin you can’t spend without permission.”

He added that while FRNT demonstrates progress in mainstream adoption, it risks blurring the line between decentralized crypto and government-issued “digital cash,” noting that if this happens, “we didn’t win – they did.”

Stablecoins have already grown into a $276 billion market, up from approximately $5 billion in 2020, per DefiLlama. Tether’s USDT leads by circulation, followed by Circle’s USDC.

Meanwhile, investment firm Keyrock projects that the stablecoin sector could capture up to $1 trillion in annual payment volume by 2030.

“This cuts both ways. On the one hand, it’s great for visibility and it gives crypto some much-needed regulatory legitimacy,” Stadelmann said. “On the other hand, a government stablecoin is the polar opposite of decentralization. It’s literally the state putting its stamp on-chain. Good for adoption, bad for the core Web3 values a lot of us fight for.”

He also noted that while FRNT pushes another crypto use case to millions of people, it’s not entirely new: “We’ve been swiping crypto cards for years. This is only different because it’s the government’s crypto card,” Stadelmann said.

The positives

Not all experts see downsides. Mike Cahill, Initial Contributor at Pyth Network, told The Defiant the move accelerates mainstream adoption in a way private issuers alone could not.

“This is significant because it’s the first time where a state isn’t just pushing to regulate crypto; it’s issuing it,” Cahill said. “A government-backed stablecoin bridges the gap between decentralized finance and the existing financial system. It’s a major validation point for the fact that stablecoins are set to be the foundation for the future of our financial infrastructure.”

Experts say stablecoins are becoming increasingly appealing to both individuals and institutions due to their yield-bearing potential, often offering better returns than traditional banks. For context, around 21% of U.S. business bank deposits (approximately $3.85 trillion) don’t earn any interest, as The Defiant previously reported.

Bullish signal

Jack O’Holleran, the co-founder and CEO of SKALE Labs, emphasized that Wyoming’s launch will be a very bullish signal for stablecoins.

“Wyoming just created the first real competition for Circle and Tether, who never thought they’d have to compete with government entities for business,” O’Holleran said. “More quality stablecoins with actual rigor in how they’re backed and how their reserves are put together will drive mass adoption. Competition forces better products.”

He explained that if larger states like California or New York get the same idea, that could result in intense competition. “Government backing hits differently than corporate backing. People understand what that means,” O’Holleran said. “Wyoming might be small, but this is going to force other states to ask if they should be doing this too.”

The launch of FRNT comes just one month after the U.S. House of Representatives passed the GENIUS Act, which was subsequently signed into law by U.S. President Donald Trump. The bill sets out rules for the issuance and governance of stablecoins.