The financial world just got an interesting development. Custodia Bank and Vantage Bank have teamed up to create something truly groundbreaking, the first-ever bank-issued stablecoin on a permissionless blockchain. They call it Avit, and it’s changing the game.
New possibilities
It’s big deal, because, Avit isn’t just any stablecoin, but it’s backed by real U.S. dollar demand deposits.
That means it’s not some synthetic imitation, it’s tokenized on the Ethereum blockchain using the ERC-20 standard.
Custodia CEO Caitlin Long puts it bluntly, and said the regulatory environment made this possible.
“We broke ground on the legal and regulatory front, proving that U.S. banks can collaborate to tokenize demand deposits on a permissionless blockchain in a regulatorily-compliant manner.”
Crypto’s tech, banks’ rules
Now, you might wonder why this matters, there are already many stablecoins. Well, it’s a big deal because it bridges traditional banking with blockchain tech.
Vantage Bank handled the fiat reserves and traditional banking services, while Custodia managed the blockchain side of things.
The result? Fast, low-cost transactions with all the safety and oversight of traditional banking.
Now many say the banking rules are about trust, and in a world where crypto regulations are still murky, Custodia and Vantage have shown that banks can innovate within these rules.
As Vantage Bank CEO Jeff Sinnott said, they will transform the sector.
“This event marks a pivotal moment in reshaping the financial landscape.”
Network effect
And let’s not forget the Ethereum factor. Ethereum advocates are cheering because Custodia chose their blockchain over others.
It’s a nod to Ethereum’s dominance in stablecoins, securing over $125.8 billion worth of them.
So, this partnership isn’t a simple tech progress, it’s a sign of what’s possible when traditional banking meets blockchain innovation. It’s a new era for payments, and it’s happening right now.
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