Custodia Bank and Vantage Bank Team Up to Issue America's First Bank Stablecoin on Ethereum

This partnership aims to issue America's first bank stablecoin on blockchain technology. The announcement of stablecoin “Avit”

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

Announced on March 25, Custodia Bank successfully tokenized US dollar demand deposits for the issuance, transfer, and redemption of Avit stablecoin using the widely used ERC-20 token standard on Ethereum. Essentially, this creates a new payment rail within the US banking system, enabling banks and their customers to transact on a blockchain network. It combines traditional banking with decentralized technology.

This initiative is successful not just from a technical standpoint but also marks a breakthrough on the legal and regulatory front.

Highlighting the significance of this move, Caitlin Long, CEO of Custodia Bank, stated that this demonstrates how US banks can work together to tokenize demand deposits on a permissionless blockchain in a fully compliant manner.

“We are grateful to Vantage Bank for joining us in this historic endeavor,” added Long. “Together, we have taken the necessary steps to tokenize demand deposits in a manner that is consistent with all applicable U.S. banking and securities laws and regulations.”

Jeff Sinnott, CEO and president of Vantage Bank, pointed out that this development is a pivotal moment in reshaping the financial landscape.

“This collaboration marks an exciting chapter in our journey to introduce innovative financial solutions,” said Sinnott. “We are proud to partner with Custodia Bank in this groundbreaking venture.”

This partnership showcases that blockchain and stablecoin are not futuristic concepts but practical solutions for real-world payments.

Real Dollar in Token Form

One of the key takeaways from this development is that Avit is a Real Dollar.

“There are no synthetic or shadow assets. Only the Federal Reserve and a few other entities in the U.S. are authorized to issue dollars, and we are one of them,” said Long.

In this case, Avit will be issued by Custodia Bank and represents tokenized demand deposits and actual funds held in checking accounts that customers can access at any time. This is an important distinction that makes Avit a true representation of a US dollar in token form, bringing more trust and stability to blockchain-based financial instruments.

Why Ethereum?

While known for its support of Bitcoin, Custodia Bank opted for Ethereum for this groundbreaking project.

This choice did not go unnoticed in the crypto community, with Ethereum advocate Evan Van Ness highlighting the decision with the statement, “ETH fixed this. Bitcoin couldn't.”

Furthermore, Ethereum educator Anthony Sassano confirmed that the stablecoin was built on Ethereum and completed in February.

With over $125.8 billion of stablecoins and $3.6 billion in tokenized US Treasury bills secured on its network, Ethereum is the optimal blockchain for this innovative stablecoin launch.

This development signals a new model for US banking and blockchain technologies, showcasing traditional financial institutions' willingness to adopt decentralized approaches while remaining compliant with regulations.

As blockchain technology matures and becomes more accessible to the broader population, projects like this could be game changers in the way we perceive money, payments, and financial transactions. With Avit having already taken the leap, could we be on the threshold of the next generation of banking?