A historic event has just marked the American crypto ecosystem. Custodia Bank and Vantage Bank have announced the launch of Avit, the very first stablecoin issued by a US bank on blockchain without authorization, opening a new chapter in the integration of blockchain technologies into the traditional financial system.
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Two US banks launch first bank stablecoin on Ethereum
This Tuesday, March 25, Custodia Bank a announced that it has tokenized U.S. dollar deposits to create the “Avit” stablecoin on the Ethereum Blockchain, using the ERC-20 standard. This innovation marks an absolute first: a stablecoin is now issued by a regulated US bank operating on a public blockchain without permission.
A new US dollar payment system has now been activated within the US banking system.
Caitlin Long, CEO of the company, emphasized the legal and regulatory aspects of this innovation, proving the possibility of compliant tokenization of bank deposits.
Jeff Sinnott, CEO of Vantage Bank, called the launch a “pivotal moment” for the transformation of the financial landscape and the future of digital payments.
A “real dollar” on the Ethereum blockchain
Unlike many existing stablecoins, Avit represents what Long described as a “true dollar “and not a “synthetic” dollar. According to Long, Avit represents a “real dollar” because it directly symbolizes a bank’s sight deposits. It is not a simple promise to repay.
The choice of Ethereum as blockchain support by Custodia has not gone unnoticed in the crypto community. Traditionally associated with Bitcoin, the bank preferred Ethereum for its new asset.
This decision is part of a trend where Ethereum currently secures over $125.8 billion in stablecoins on its network, almost twice as much as Tron, the second largest blockchain with $64.8 billion according to DefiLlama. The Ethereum network also tokenizes over $3.6 billion worth of US Treasury bonds.
The launch of Avit could mark the beginning of a new wave of adoption of blockchain technologies by traditional US financial institutions. By demonstrating that it is possible to create regulatory-compliant solutions, Custodia and Vantage Bank are paving the way for other players in the banking sector.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
