Custodia Bank and Vantage Bank launch bank-issued stablecoin

Wyoming-based Custodia Bank, in collaboration with San Antonio-based Vantage Bank, have successfully executed the first U.S. bank-led tokenization of dollar demand deposits on a permissionless blockchain.

The banks issued, transferred and redeemed AvitTM stablecoins for a bank customer. The multi-stage test showcased key benefits including low fees, rapid settlement, programmability, and auditability, all within a regulated banking environment.

All parties to the series of test transactions observed several efficiencies, including low transaction costs, fast transaction settlement, programmability and auditability within a safe, compliant and regulated banking environment.

The banks complied with all applicable U.S. bank regulatory requirements and worked closely with their respective bank regulators to ensure the success of this first-of-its-kind project.

Custodia Bank CEO Caitlin Long said, “We broke ground on the legal/regulatory front, proving that U.S. banks can collaborate to tokenize demand deposits on a permissionless blockchain in a regulatorily-compliant manner. Custodia looks forward to the reversal of U.S. regulatory obstacles that have stymied stablecoin innovation in recent years, so that American consumers can benefit from the substantial network effects and global reach of permissionless blockchain technologies.”

Vantage Bank President and CEO Jeff Sinnott said, “This event marks a pivotal moment in reshaping the financial landscape, demonstrating how blockchain and stablecoins can revolutionize payments. By executing this transaction, we’re empowering banks to lead responsibly in cross-border modernization, while also leveraging the strength of the U.S. dollar and demonstrating regulators’ support for responsible innovation.”