Custodia and Vantage Bank partner for ‘first bank-issued stablecoin’

The crypto-friendly Custodia Bank has worked with Vantage Bank to complete what the two firms say is “America’s first-ever bank-issued stablecoin” on a permissionless blockchain.

Custodia said on March 25 that it tokenized US dollar demand deposits and facilitated the issuance, transfer and redemption of the stablecoin “Avit” on Ethereum via the ERC-20 token standard.

“A new US dollar payment rail has now been activated inside the US banking system,” Custodia added.

“We broke ground on the legal/regulatory front, proving that US banks can collaborate to tokenize demand deposits on a permissionless blockchain in a regulatorily-compliant manner,” said Custodia CEO Caitlin Long.

Vantage Bank CEO and President Jeff Sinnott said the event was a “pivotal moment in reshaping the financial landscape, demonstrating how blockchain and stablecoins can revolutionize payments.”

In a series of posts on X, Long explained that the Avit stablecoin was a “real dollar” and not a “synthetic” dollar, as Federal Reserve Board Governor Christopher Waller called stablecoins in a Feb. 12 speech.

“Real” US dollars, Long explained, can only be issued by the Federal Reserve and a few legally authorized entities, including Custodia Bank. She added that Avit is a “real dollar” as it tokenizes a bank’s demand deposit — funds that customers can withdraw on-demand, such as money in a checking account.

Ethereum backers cheer Custodia’s chain choice

Custodia has historically championed Bitcoin, and Ethereum advocates were quick to note that the bank chose Ethereum for the stablecoin.

“ETH fixed this. Bitcoin couldn’t,” wrote Ethereum advocate Evan Van Ness. Ethereum educator Anthony Sassano also posted to make clear the “permissionless blockchain” Custodia referred to in its announcement.

“Just in case it wasn’t obvious, this is built on Ethereum.”

Ethereum secures over $125.8 billion worth of stablecoins on its network, nearly doubling the second-place Tron blockchain at $64.8 billion, DefiLlama data shows.

Ethereum also tokenizes over $3.6 billion worth of US Treasury bills — seven times more than its next competitor, Stellar, at $465.7 million, according to RWA.xyz data.

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