Custodia Bank Launches First Bank-Issued Stablecoin on a Permissionless Blockchain

Custodia Bank, known for its crypto-friendly approach, has partnered with Vantage Bank to successfully tokenize dollar-demand deposits through the issuance of its trademarked Avit stablecoin on the Ethereum mainnet.

According to the bank, this marks the “first bank-issued stablecoin on a permissionless blockchain.” The issuance process was carried out in eight transaction stages, with Custodia Bank managing blockchain issuance and custody services, while Vantage Bank handled FedWire/ACH services and oversaw the fiat reserves backing the stablecoin.

“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,” said Custodia Bank CEO Caitlin Long. “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.”

Custodia highlighted that all parties involved in the transactions experienced “low transaction costs, fast transaction settlement, programmability and auditability within a safe, compliant and regulated banking environment.” The bank also emphasized that “a new U.S. dollar payment rail has now been activated inside the U.S. banking system, at a time when the global community is increasingly demanding U.S. dollar stablecoins for transactional use.”