A New Era Begins: America’s First Bank-Issued Stablecoin Lands on Ethereum

The crypto industry stepped into a new revolution phase with the Custodia Bank and Vantage Bank partnership. This partnership aims to issue America’s first bank stablecoin on blockchain technology. The announcement of stablecoin “Avit” issued on Ethereum opens doors for future financial innovation.

Avit: A New Dollar Payment Rail

On March 25, Custodia Bank announced that it successfully tokenized US dollar demand deposits, allowing for the issuance, transfer, and redemption of the Avit stablecoin. This was made possible through the widely used ERC-20 token standard on Ethereum. In simple terms, this means that a new payment rail has been created within the US banking system. It allows banks and their customers to make transactions on a blockchain network, combining traditional banking with decentralized technology.

Regulatory Compliance at the Core

The success of this initiative didn’t just come from technical innovation but also from breaking ground on the legal and regulatory front. Custodia CEO Caitlin Long emphasized that this move proved US banks could work together to tokenize demand deposits on a permissionless blockchain in a fully compliant way. Vantage Bank CEO and President Jeff Sinnott called this development a pivotal moment in reshaping the financial landscape. Their collaboration demonstrates that blockchain and stablecoins are no longer futuristic concepts but practical solutions for real-world payments.

What Makes Avit a “Real Dollar”?

One of the key takeaways from this development is that Avit is a Real Dollar. According to Caitlin Long, stablecoins are often seen as synthetic, but Avit differs. She explained that real US dollars will only be issued by the Federal Reserve and a few legally authorized entities, including Custodia Bank.

In this case, Avit represents tokenized demand deposits and actual funds held in checking accounts that customers can access anytime. This important distinction makes Avit a true representation of a US dollar in token form, bringing more trust and stability to blockchain-based financial instruments.

Why Ethereum Was Chosen

Interestingly, although Custodia Bank has traditionally supported Bitcoin, it chose Ethereum for this groundbreaking project. This choice did not go unnoticed in the crypto community. Ethereum advocate Evan Van Ness highlighted this decision with the statement, “ETH fixed this. Bitcoin couldn’t.” Ethereum educator Anthony Sassano also confirmed that the stablecoin was built on Ethereum, which is known for its robust infrastructure and smart contract capabilities. With over $125.8 billion of stablecoins and $3.6 billion in tokenized US Treasury bills secured on its network, Ethereum was the natural choice for this innovative stablecoin launch.

A New Chapter for Banking and Blockchain

The success of the Avit Ethereum launch can signal a new model for US banking and blockchain technologies. It is a testament that traditional financial institutions are open to adopting decentralized approaches while maintaining regulation compliance. 

As blockchain continues to mature and is increasingly understood by the wider population, other projects can be significant game changers in the way we perceive money, payments, and financial transactions. With Avit having leaped, we could be on the threshold of the next generation of banking.

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