Wyoming’s Stablecoin Controversy: Ripple’s Exclusion Sparks Industry Debate

The Wyoming Stablecoin Commission has recently come under scrutiny following the announcement of its top seven blockchain network finalists for the development of the Wyoming Stable Token (WST), expected to launch in 2025. The list includes Solana, Avalanche, Stellar, and Ethereum, along with its Layer-2 networks like Polygon, Arbitrum, Base, and Optimism. However, glaring omissions such as Ripple’s XRP and Cardano have raised industry-wide questions about transparency and fairness in the selection process.

Ripple and XRP’s Exclusion: A Surprising Omission

Ripple’s XRP Ledger, a well-established and widely used blockchain for payments and settlements, was notably absent from the list of approved networks. This move has sparked confusion and discontent, especially given Ripple’s recent launch of RLUSD, a USD-backed stablecoin. The XRP Ledger’s capabilities are widely acknowledged in the blockchain space, making its exclusion all the more perplexing.

Industry participants have pointed out that XRP’s exclusion appears inconsistent with the selection of Stellar—a protocol that shares similar origins with Ripple. This discrepancy has fueled speculation about the decision-making process and whether internal biases or conflicts of interest influenced the outcome. Ripple’s market cap currently stands at approximately $84 billion, significantly larger than some of the selected blockchains.

Concerns Over Transparency and Governance

The selection process for Wyoming’s stablecoin networks has been criticized for its opaque nature. Normally, such processes involve publishing functional and non-functional requirements, followed by an open invitation for all networks to submit proof-of-concept prototypes. This allows for a fair assessment of each network’s capabilities. However, Wyoming’s process deviated from this approach, with the Blockchain Selection Working Group internally scoring networks and unilaterally determining the qualified candidates.

The absence of public input, lack of appeals process, and the abrupt shift from an open qualification approach to a pre-determined shortlisting process have fueled claims of procedural unfairness. Charles Hoskinson, the founder of Cardano, noted that dozens of capable networks, including Cardano, Algorand, Tezos, and Aptos, were similarly excluded without being given a chance to submit proof-of-concept demonstrations.

Allegations of Conflicts of Interest

Industry insiders have raised concerns about potential conflicts of interest in the selection process. The executive director of the Wyoming Stablecoin Commission, Anthony Apollo, is a former employee of ConsenSys and has connections to the Polygon ecosystem—two entities that share business interests with some of the selected blockchain networks. Notably, several of the chosen blockchains, such as Polygon and Arbitrum, are closely associated with Circle’s USDC stablecoin ecosystem.

Adding to the controversy, a former general counsel at Circle is reportedly one of the commissioners. Critics argue that the heavy inclusion of “Circle-friendly” networks raises questions about whether the decision to exclude Ripple, Cardano, and others was influenced by favoritism toward Circle’s ecosystem partners.

Impact on Wyoming’s Blockchain Ambitions

Wyoming’s ambitious plan to launch a state-backed stablecoin was seen as a landmark opportunity to position the state as a blockchain hub. However, the current process may have done the opposite. The exclusion of major blockchain networks has led to suggestions of potential legal challenges. There’s talk of a possible class-action lawsuit, as stakeholders believe that the process created an “unfair competitive advantage” for certain blockchains while disadvantaging others.

Hoskinson criticized the commission’s actions, asserting that Wyoming’s leadership in the crypto space is now at risk. The notion that the state’s selection process is “picking winners and losers” is particularly concerning, given Wyoming’s previously strong reputation for supporting blockchain neutrality and innovation.

Bitcoin Excluded Too?

Perhaps the most surprising exclusion of all is Bitcoin. Given its status as the world’s largest and most recognized cryptocurrency, its omission from the list of supported networks is seen as a significant oversight. With incoming President Donald Trump’s reported interest in establishing a strategic Bitcoin reserve, the decision to exclude Bitcoin from the Wyoming stablecoin’s infrastructure has baffled industry participants and policymakers alike.

Looking Ahead: Will Wyoming Correct Course?

Moving forward, there’s growing pressure on Wyoming’s lawmakers and regulatory bodies to review and potentially reform the selection process. Hoskinson emphasized that Wyoming’s competitive edge as a pro-crypto jurisdiction could be at risk if such opaque practices continue. Calls for greater transparency, a return to an open RFP (Request for Proposal) process, and the opportunity for all blockchains to prove their eligibility are growing louder.

The exclusion of major players like XRP, Cardano, and even Bitcoin signals a shift in Wyoming’s blockchain strategy. It’s a shift that industry stakeholders believe could drive businesses and jobs away from Wyoming to other crypto-friendly states like Texas, South Dakota, and Colorado. Unless Wyoming’s government and the stablecoin commission address these concerns, the state’s once-golden reputation as a blockchain pioneer may be tarnished.