North Dakota to become second state to issue stablecoin with ‘roughrider’ token

North Dakota plans to follow Wyoming to become only the second state to issue a stablecoin, in this case to initially facilitate bank-to-bank transactions while the digital tokens are being more widely experimented with in the U.S. the financial system.

The token, named the “Roughrider Coin” after the U.S. volunteer military regiment led by Theodore Roosevelt during the Spanish-American War, is slated to be launched next year by the Bank of North Dakota — the only state-owned bank in the U.S. — through a partnership with Fiserv Inc. The bank’s core business is partnering with the 80-plus community banks and credit unions across the state to facilitate agricultural loans.

“We’re leveraging our 106-year history to stand up and be a leader in the banking, fintech space for North Dakota,” Don Morgan, chief executive officer of Bank of North Dakota, said in an interview. “We see this affecting the industry and continue to affect the industry, and so we’re getting involved.”

The bank will be among the first institutions to issue a stablecoin using Fiserv’s recently announced digital asset platform, which plans to use technology from Paxos Trust Co. and Circle Internet Group Inc. to help issue the tokens. The Roughrider coin will be fully backed by dollars.

“As one of the first states to issue our own stablecoin backed by real money, North Dakota is taking a cutting-edge approach to creating a secure and efficient financial ecosystem for our citizens,” North Dakota Gov. Kelly Armstrong said in a statement.

Initially, the plan is for the stablecoin to be used to move money between in-state banks and credit unions for transactions like loan advances, overnight lending, construction advances and more, Morgan said. Later on, the bank may consider offering stablecoin deposit accounts to clients. North Dakota’s plan comes weeks after Wyoming launched the Frontier Stable Token. Unlike Wyoming’s FRNT token, Bank of North Dakota does not see its coin being used for consumer payments in the near future, according to Morgan.

The state stablecoins come as dozens of the tokens are being issued by companies following the passage of the first U.S. regulation governing the sector in July. Since then, a swath of crypto firms have also sought to get banking charters, while payments firms Stripe Inc., PayPal Holdings Inc., Visa Inc. and Mastercard Inc. have waded deeper into the digital assets sector.

“It’s very hard to see how this goes away given how friendly the regulatory environment is and how some of these very well-funded fintechs have every incentive to continue to try to promote the space,” said Takis Georgakopoulos, chief operating officer of Fiserv. “In my view, it’s much more likely than not that we’re going to see more adoption.”

While Georgakopoulos has an optimistic outlook on the technology overall, he notes that there are still several barriers to widespread adoption. The clearest hurdle is building rules around consumer protections like what payments giants Visa and Mastercard offer for card payments, he noted.

Roosevelt had a deep connection to North Dakota, starting with the future U.S. president’s move to the Badland in the 1880s to ranch and hunt. His conservation helped to lead to the establishment of the Theodore Roosevelt National Park. North Dakota is often referred to as the Rough Rider state.