Custodia Bank and Vantage Bank have made headlines with the launch of the first-ever U.S. bank-issued stablecoin deployed on a permissionless blockchain. This groundbreaking development was officially announced on March 25 when Custodia revealed that they had tokenized U.S. dollar demand deposits and issued the stablecoin named “Avit” on the Ethereum network using the widely adopted ERC-20 token standard.
In their official announcement, Custodia declared that a new U.S. dollar payment rail had been activated within the U.S. banking system, marking a significant milestone in the world of blockchain and digital assets. The CEO of Custodia, Caitlin Long, emphasized that this development showcases that federally regulated banks can compliantly issue tokenized deposits on public blockchain networks, paving the way for further innovation in the financial sector.
Avit, the stablecoin issued by Custodia, is backed by demand deposits, making it a “real dollar” stablecoin rather than a synthetic one. This distinction is crucial as it ensures that Avit is backed by funds that can be withdrawn on demand, such as those in checking accounts, and is issued by federally authorized institutions, giving it added credibility and stability.
Vantage Bank’s CEO, Jeff Sinnott, praised the launch of Avit as a pivotal moment that highlights the transformative potential of blockchain and stablecoins in revolutionizing the payments sector. The decision to deploy Avit on Ethereum, rather than Bitcoin, was also met with approval from Ethereum supporters, who lauded the platform’s capabilities and scalability.
The surge in active stablecoin wallets by over 50% in the past year underscores the growing adoption and engagement within the digital asset ecosystem. This increase in active stablecoin addresses, coupled with the rising total supply of stablecoins, reflects the fundamental role that stablecoins play in providing liquidity, stability, and accessibility to users worldwide.
Federal Reserve Governor Christopher Waller’s endorsement of stablecoins as a key player in the financial ecosystem further solidifies their importance in the digital economy. With stablecoins facilitating faster cross-border payments, providing a stable store of value for traders, and showing promising use cases in retail transactions, their role in strengthening the global dominance of the U.S. dollar cannot be understated.
In conclusion, the launch of America’s first bank-issued stablecoin on blockchain by Custodia and Vantage Bank marks a significant step forward in the evolution of digital assets and blockchain technology. As the adoption of stablecoins continues to grow, their impact on the financial landscape is sure to deepen, offering new opportunities and innovations for users worldwide.