Custodia Bank ventures into the stablecoin business

On Tuesday, March 25, Custodia Bank disclosed that it had collaborated with Vantage Bank to tokenize U.S. dollar demand deposits on Ethereum

Custodia Bank has become the first bank in the U.S. to issue a stablecoin on a permissionless blockchain, tokenizing U.S. dollar demand deposits on Ethereum as Avit, the bank's token, according to an announcement by the bank on Tuesday, March 25.

The stablecoin is compliant with all relevant anti-money laundering and sanctions regulations, and it is said to open the door for legacy finance to benefit from blockchain technology's global, permissionless, low-cost, and programmable nature within the banking system.

“We took territory today, issuing the first bank-issued #stablecoin on a permissionless blockchain & it's not what you think. 🧵 below. The real impact is on #tradfi—yes, #crypto took regulatory territory, but #tradfi is the real story in what @custodiabank did w/ @Vantage_Bank,” Caitlin Long, founder and CEO of Custodia Bank, said on Twitter.

This distinguishes Avit from other stablecoins, which the Federal Reserve classifies as synthetic dollars. Avit is said to be “real dollars” as it is issued by a bank authorized to take demand deposits. This distinction will likely lower the barriers to entry for traditional finance (TradFi).

However, Avit's blockchain adoption potential is not what has caught the attention of crypto natives. Rather, it is the fact that Custodia, Long's bank, is known for being a Bitcoin (BTC) supporter.

For many observers, the shock is the decision of Custodia, which is run by Long, a notorious Bitcoin maximalist, to launch on Ethereum. The situation was made even more ironical as Custodia seemed to shy away from mentioning Ethereum in their announcement, with some poking the crypto bank to "say Ethereum."

Say Ethereum https://t.co/EyUljDud3w

— Alex.eth 🇺🇸 🛡️ (@AlexanderFisher) March 25, 2025

Even VanEck's Head of Digital Assets Research, Matt Sigel, joined in on the jabs, humorously "fixing" the Custodia announcement headline to: "Bitcoin Maxi Issues Stablecoin on Ethereum."

Bitcoin Maxi Issues Stablecoin on Ethereum https://t.co/2zah0EGXOg pic.twitter.com/2MjLS54fDt

— matthew sigel, recovering CFA (@matthew_sigel) March 25, 2025

Whatever the case, Custodia's recent venture comes as the Trump administration is pushing for stablecoin regulations before the end of the year.

In line with this push, the Senate Banking Committee recently passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to a full Senate vote.

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