Revolutionizing Banking: Custodia Bank and Vantage Bank Launch Avit Stablecoin
Custodia Bank and Vantage Bank have made history by issuing the first US bank-backed stablecoin, Avit, on a public blockchain network. This groundbreaking move was announced in a press release on March 25.
Testing the Waters
- The stablecoin, Avit, was put to the test in a series of transactions with a business customer.
- The pilot program included minting, transferring, and redeeming tokens on the Ethereum (ETH) mainnet using the ERC-20 standard.
Banks Embrace Tokenized Payments
The series of eight test transactions showcased a fully compliant process for minting, transferring, and redeeming stablecoins on a permissionless blockchain.
- Avit tokens were generated using the popular ERC-20 standard.
- Real-world business-to-business transfers and redemptions into fiat US dollars were part of the pilot.
Combining Blockchain with Banking
This move represents a significant step in integrating blockchain technology with the US banking system to meet the increasing global demand for digital dollar payments.
- Custodia Bank managed the issuance, custody, and monitoring of the tokens, while Vantage Bank held the fiat reserves backing the tokens.
- The pilot involved a bank customer transferring Avit tokens into self-custody, transacting with third parties, and redeeming them back into dollar deposits.
The Future of Payments
With features like programmability, fast settlement times, low transaction costs, and transparent auditability, blockchain-based stablecoins have the potential to revolutionize US dollar payments while maintaining the security of the banking system.
Leading the Way
This milestone demonstrates how banks can drive cross-border payment innovation and reinforce trust in the American dollar. It also marks the first use of Custodia’s US patent for tokenizing bank deposits on permissionless blockchains.
A Path Forward
As U.S. policymakers discuss the role of stablecoins in the economy, the launch of Avit sets a precedent for dollar digitalization that balances innovation with regulatory oversight.
