Custodia, Vantage Bank Issue First Bank-issued Stablecoin on Ethereum

Custodia Bank, in partnership with Vantage Bank, has made history by issuing the first bank-issued stablecoin on a permissionless blockchain, specifically the Ethereum network. This stablecoin, named Avit™, represents the tokenization of U.S. dollar demand deposits, signifying a new chapter in digital payment solutions. The process involved eight distinct transaction stages, with Vantage Bank overseeing the fiat reserves and essential banking services, while Custodia Bank managed the blockchain issuance and redemption services. This collaboration exemplifies how traditional banking entities can operate efficiently within the emerging crypto landscape while adhering to stringent regulatory requirements, including BSA, AML, and OFAC mandates.

The issuance of Avit™ stablecoins on the Ethereum mainnet, following the ERC-20 standard, showcases the seamless integration of blockchain technology into traditional banking operations. This innovative move not only introduces a new payment rail within the U.S. banking system but also addresses the growing global demand for U.S. dollar stablecoins. The successful execution of this project underscores the importance of regulatory compliance and the potential for future financial frameworks that support stablecoin innovations, potentially benefiting consumers through enhanced transaction efficiencies and security.

Caitlin Long, the CEO of Custodia Bank, emphasized the legal and regulatory significance of this achievement, stating that it proves U.S. banks can collaborate to tokenize demand deposits in a compliant manner on a permissionless blockchain. Jeff Sinnott, President and CEO of Vantage Bank, further highlighted the transformative potential of blockchain and stablecoins in reshaping the financial landscape, empowering banks to lead the modernization of cross-border transactions while maintaining the integrity of the U.S. dollar.

The project also leveraged Custodia's U.S. patent 11392906 for the tokenization of U.S. dollar bank deposits, marking an important step forward for smart-contract applications on permissionless blockchains. As these technologies continue to evolve, they hold the capacity to redefine how banks manage daily transactions and store value. Custodia Bank, with its commitment to bridging compliant banking with digital assets, and Vantage Bank, known for its innovative financial solutions, are at the forefront of this technological revolution. Their collaboration sets a precedent for future financial innovations, paving the way for a more efficient and secure digital payment landscape.