Cardano founder Charles Hoskinson has threatened legal actions over the blockchain network’s omission from the Wyoming Stablecoin project.

In a Nov. 25 video broadcast on social media platform X, Hoskinson accused the Wyoming Stable Token Commission of favoring certain blockchains and ignoring transparency. He noted that his company, Input Output Global (IOG), had served in an advisory capacity over the past 18 months but was not informed about the criteria or procedures for selecting blockchains.

Wyoming is set to debut the U.S. dollar-backed stablecoin Wyoming Stable Token (WST) in the first quarter of 2025. The Wyoming Stable Token Act passed in March 2024, authorized the creation of a commission to oversee the project. The act mandates that the stablecoin be backed by cash, U.S. Treasuries, and reverse repos, specifying strict maturity limits to maintain liquidity and stability.

Hoskinson’s comments were ignited after reports emerged that the Commission has announced plans to launch its stablecoin using blockchains such as Solana, Ethereum, Avalanche, Stellar, and several layer-2 solutions, including Polygon and Optimism.

Cardano’s absence sparked widespread criticism within the blockchain network’s community, considering Hoskinson’s longstanding ties to Wyoming’s blockchain initiatives.

Legal action

In his video, Hoskinson argued that Cardano’s exclusion violated Wyoming’s good-faith procurement laws. He stated that the Commission denied Cardano a fair chance by bypassing a formal request-for-proposal process.

The Cardano founder also dismissed claims about Cardano’s alleged technical shortcomings, calling them baseless and biased. He wrote on X:

“Nothing was published and an unelected bureaucrat decided himself what Cardano can and cannot do and then unilaterally excluded a nearly 40 billion dollar protocol without any debate or oversight. IOG isn’t even allowed to bid on an RFP. This isn’t what we fought for over the last few years in Wyoming. It’s disgusting and shameful.”

Furthermore, Hoskinson expressed concerns that the selected blockchains might divert economic benefits away from Wyoming. He highlighted that Wyoming-based firms, including IOG, which have invested heavily in the state, might not gain from the project.

Due to this, the Cardano founder warned that the decision could harm Wyoming’s blockchain ecosystem. He disclosed that his team is weighing potential litigation and other strategies to challenge the decision. He also warned that the issue could have political ramifications, particularly during future elections.

In a subsequent X post, Hoskinson stated:

“Several lawmakers have already reached out to both the commission and governor, saying that this process did not reflect their wishes with the bill and hurts Wyoming. Many options are moving forward, and they will follow a systematic process to address what was a broken and biased pre-qualification process designed to exclude IOG.”

Mentioned in this article

U.S. Senator Cynthia Lummis has criticized the Department of Justice (DOJ) for its recent interpretation of regulations surrounding non-custodial software wallets. In the view of Senator Lummis, the DOJ’s method is inconsistent with the past advice provided by the Treasury, which considers such wallets as means of potential money transmissions. This contradiction, she believes, may result in the break of the rule of law by criminalizing the core elements of the operation of Bitcoin and decentralized finance.

I am deeply concerned by the Biden administration criminalizing core tenants of the Bitcoin network and decentralized finance.

My full statement. pic.twitter.com/M3CHcNTi3x

— Senator Cynthia Lummis (@SenLummis) May 1, 2024

The senator’s objections were precipitated by the DOJ’s filing of criminal charges against developers tied to the Bitcoin mixer Samourai Wallet and the Tornado Cash platform. The Department of Justice, however, has always considered the creation and maintenance of these platforms unauthorized money transmission activities. 

Lummis’ reply has been to defend that such interpretations pose risks to basic property rights, which are the very essence of American values, accenting the people’s right to “hold your own keys and run your own node.”

Reaction from the Bitcoin Community and Legal Experts

The DOJ’s position has attracted a strong response not only from politicians like Senator Lummis but also from a variety of entities in the cryptocurrency community. According to Coin Center, a digital currency and blockchain technology advocacy group, the DOJ’s position is overreaching. 

Peter Van Valkenburgh, Coin Center’s director of research, expressed worries that this interpretation may suggest that “every functional cryptocurrency wallet and smart contract is performing money transmission,” which he maintains extends the scope of the definition of money transmission too broadly.

Coin Center has also moved to challenge these legal interpretations by submitting an amicus brief in favor of Roman Storm, the developer of Tornado Cash. They, in fact, entirely argue that what Storm actually did, i.e., code publishing, has to be protected by the First Amendment, thus focusing on the freedom of speech principle.

Potential Consequences for Software Developers

The consequences of the DOJ’s understanding go far beyond specific cases and are also related to some other crucial issues in the field of the cryptocurrency industry, including the relation of software developers. 

If developers are classified as money transmitters for the development and distribution of technology that enables digital transactions, it sets a standard that would require all developers to be licensed as financial operators. This situation could suppress innovation and discourage activity in the cryptocurrency world because of greater regulatory requirements.

In addition, such an extensive use of money transmission laws may result in many operational changes within the crypto industry. Developers need to implement identity verification processes or even limit services to avoid regulatory breaches, fundamentally altering the decentralized and open nature of current blockchain technologies.

Read Also: Crypto In Spotlight as UK FCA Unveils Money Laundering Report

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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.