(Bloomberg) -- Not far from the Cheyenne Frontier Days Arena, home of the world’s largest outdoor rodeo — “The Daddy of ‘Em All,” locals boast — the spirit of the Old West has run headlong into dreams of a crypto future.

Here in the windswept capital of Wyoming, about 430 miles southeast of the billionaire playground of Jackson, a grand experiment in 21st-century finance is underway.

It doesn’t look like much yet. But these days, you can pick up, say, a box of 100 salted cinnamon roll caramels from Fallon’s Baked Goods — price: 76 old-fashioned dollars — and pay for it with 76 brand-new Frontier Stable Tokens, the official digital currency of the Cowboy State.

The new cryptocurrency is part of a long and surprisingly successful effort to turn Wyoming into a premier destination for money of all kinds. Other states see what’s happening here as a blueprint for how to — or maybe how not to — devise cryptocurrencies of their own. The local finance crowd is watching, too, with an eye on the state’s thriving industry in secretive financial trusts. If the Frontier tokens take off, they also could generate money for Wyoming public schools.

Believers and skeptics are all asking the same question: Will anyone actually use this stuff? The answer out of the gate: a definite maybe. So far, the market value of Wyoming’s stablecoins, which have a fixed value of $1 apiece, is about $1 million.

Governor Mark Gordon concedes he’s been a “cautious adopter” himself. He says he’s focusing on making sure the Frontier tokens are reliable. Sales, he predicts, will come in time. 

“We’re not trying to be the fastest horse in the barn,” Gordon says during an interview in the domed Wyoming State Capitol in downtown Cheyenne. “We’re trying to actually be the one that you can take out and make sure it works.”

The hope — and it’s a big one — is that the Frontier Stable Tokens one day might attract a national or even international following. That could help secure a spot for Wyoming as a hotbed of crypto innovation. Kraken, the giant cryptocurrency exchange, was so taken with the state’s crypto-friendly stance that it moved its headquarters to Cheyenne from San Francisco last year.  

Still, even fans of high tech here on the High Plains have doubts. 

“It’s a great token. I applaud it,” says Rob Jennings, co-founder of CattleProof Verified, a Cheyenne startup that’s trying to use blockchain technology to track cattle from the ranch to the slaughterhouse. He just isn’t sure that the tokens are commercially viable yet.

It doesn’t hurt, of course, that President Donald J. Trump, whose two oldest sons are heavily involved in cryptocurrency businesses, has pledged that he’ll “never let crypto down.” Treasury Secretary Scott Bessent has predicted that the market value in stablecoins, which totals $300 billion today, could grow 10-fold in a few years. Delaware, Maryland, New Hampshire and North Dakota are watching the experiment in Wyoming as they consider issuing crypto tokens too.

Stablecoins increasingly are becoming embedded in payments even as Wall Street is experimenting with tokenized assets and banks are building blockchain infrastructure. Even so, the recent downturn across much of the crypto market has destroyed once-promising projects and vaporized billions of dollars.

A lot of money, digital or not, courses through the Cowboy State. The Jackson Hole region, gateway to Grand Teton and Yellowstone national parks, is the wealthiest area in the United States per capita. Millionaires and billionaires from around the world stash money in Wyoming, which consistently ranks among the most tax-friendly states. Local trust experts who devise secretive “silent trusts” and “Cowboy Cocktails” — complex arrangements that can shield assets from tax authorities, creditors and ex-spouses — have begun offering services for digital assets.

Bitcoin, the original and most popular cryptocurrency, has had a rough ride lately. It’s fallen by about 50% from its all-time high last October, and slipped below $60,000 this month. But Frontier Stable Tokens, as the name suggests, aren’t Bitcoin-style crypto. Like most of the largest stablecoins, the Wyoming token is pegged 1:1 to the dollar. The state is backing its tokens with a reserve of cash and Treasury bills.  

With an estimated 589,000 people, or six per square mile, Wyoming has the smallest population of any state. But in its own little way it has become a test case for the national collision between traditional banks and the crypto industry, now a formidable political force in Washington. Banks worry that the crypto crowd — which wants to act like banks without being regulated like banks — could siphon off deposits, help money launderers and more.  

Scott Meier, president of the Wyoming Bankers Association, dismisses the Frontier tokens as little more than a novelty. Wyomingites are a conservative bunch. Few of them will swap banks, checkbooks and cash for state-issued crypto, he says.

“I would be surprised if you even got more than 1% of our small population that are actually wanting to do a lot of stuff with stablecoins,” Meier says.

But then, a traditional banker would say that. Kraken, a major player in crypto, smells opportunity. When it announced its move to Cheyenne a year ago, it pointed to dozens of new laws that Wyoming has enacted in hopes of turning the state into a hub for digital assets. Now Kraken (legally named Payward Inc.) is listing Frontier Stable Tokens for the state.

It’s taken years to get here. David Pope, a Cheyenne certified public accountant, helped form the Wyoming Blockchain Coalition a decade ago after reading an article on the technology. He now serves on the Wyoming Stable Token Commission.

Unlike Tether and other private stablecoins, the Wyoming tokens were designed for the public good. Once the commission covers the cost of developing the token and builds a reserve equivalent to 2% of the value of the tokens, the state can use interest on the Treasury bills backing the coins to fund public schools. When that day might come is anyone’s guess.

“I would love to see large corporations use us as their international settlement vehicle,” Pope says. “When we are able to start funding the school foundation, I will be joyful.”

Leading the stable token commission is Anthony Apollo, who grew up nearly 1,800 miles to the east, in Westchester County, just north of New York City. He landed here after working at KPMG and EY (previously Ernst & Young) and several blockchain startups.

“They needed someone with an odd blend of banking experience, securities law, product management, blockchain, lived in Cheyenne and could start a new job the next day,” Apollo says.

Other commissioners include Flavia Naves, former general counsel of Circle Internet Group Inc., which has issued $75 billion in USDC stablecoins; and Joel Revill, a former portfolio manager at Citadel who is now chief executive officer at Two Ocean Trust in Jackson, which offers trust and crypto custody services.

To clear the way for the Frontier tokens, a determined group of state legislators passed about 50 laws. Wyoming has exempted certain crypto tokens from money transmitter laws; ensured that its tokens aren’t defined as securities under state law; and created a new type of bank, known as special purpose depository institutions, commonly referred to as a “speedy,” that can provide custody services for digital assets. One of those banks, Cheyenne-based Custodia Bank, has been locked in a legal fight with the Federal Reserve over access to payment infrastructure. The case is likely to end up in the US Supreme Court.

State Senator Chris Rothfuss, a chief proponent of the new tokens, predicts money will pour in.

“We need our market cap to get up into the billions of dollars,” says Rothfuss, a Democrat in a legislature filled with Republicans.  The goal is “absolutely” attainable, he said.

But even believers concede that winning people over will take time. Deep red Wyoming, which hasn’t voted for a Democratic presidential candidate since 1964, when Lyndon Johnson won the White House, has a strong you-do-you libertarian streak. Many folks want government to stay out their way. The state is reluctant to spend money on marketing its $5-billion-a-year tourism industry, its second-largest economic engine, let alone on marketing its new stablecoin.

“Wyoming has a pretty significant contingent of grouchy libertarians who are kind of distrustful of the government,” says Austin Campbell, a stablecoin expert who has advised the token commission. The first priority must be ensuring that Frontier Stable Tokens are safe and stable, he says. That often means saying “No” to politicians and constituents.

One idea to promote the tokens is to “white label” Wyoming’s technology and let other states use it to issue their own stablecoins.  Apollo, the executive director of the stable token commission, says Wyoming has been talking to close to 20 states and a number of US territories. It hasn’t cut any deals.

Up in Bismarck, North Dakota, the wheels are already turning. The Bank of North Dakota, which bills itself as the only state-owned bank in the country, has partnered with Fiserv, the New York-based fintech, to develop the Roughrider Coin. That stablecoin would be used for transactions between North Dakota’s 91 community banks and credit unions. Unlike the Wyoming token, the Roughrider Coin wouldn’t be available to the general public, says Don Morgan, who leads the Bank of North Dakota. The stablecoin is due out later this year.

“There would be no reason to buy and hold Roughrider Coin by any bank,” Morgan says. “It is a just-in-time payment mechanism.”

Morgan says he doesn’t have an opinion about the Wyoming token.

“Wyoming is doing what it feels best,” he says. “I think their mission with Frontier coin is much different than the mission we have here with Roughrider. I’m not saying one mission is better than the other.”

New Hampshire and Delaware are looking into stablecoins, too. Greg Strong, a lawyer on Delaware’s Blockchain & Digital Innovation Task Force, says the experiment in Wyoming looms large for other states.

“Wyoming obviously has done an extraordinary amount of work to get the Frontier token off the ground,” Strong says. “In doing that, they’ve thought through a lot of the same issues that any other state would have to think through to do this in their own state.”

Back in Cheyenne, Fallon Bonomo, who sells cookies and caramels out of her home micro bakery, is a convert already. She says Frontier Stable Tokens are quick and easy to use.  “And I know once tokens are sent to me, they are secure,” she says.

A dozen of her homemade snickerdoodle cookies will set you back 18 Frontier Stable Tokens.

--With assistance from Olga Kharif and Steve Stroth.

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