Melker Bengtsson
TL;DR
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U.S. Bank has completed its first publicly announced transaction with USBDC, their own dollar-backed stablecoin built on Stellar
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The transaction moved between their North American and European divisions as a pilot test, with no availability for customers
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The pilot tested the full lifecycle of the token, from minting to clawback, with issuer controls built into the protocol
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U.S. Bank is not first to the party: 21 major banks, JPMorgan and others are also moving on stablecoins
U.S. Bank has completed an internal transaction with their own stablecoin. The stablecoin, called USBDC, moved between their North American and European divisions. This was their first publicly announced transaction with the new, dollar-backed stablecoin, which is built on Stellar.
For now, the stablecoin is internal, the transaction a pilot test and there’s no availability for U.S. Bank customers.
A Pilot Test From Minting to Clawback
The pilot tested the full lifecycle of the token, from minting to clawback. The choice of a public blockchain was a bit surprising. Most other issuers, such as JPMorgan, have historically stayed private. However, there are issuer controls built into the protocol.
Included in the pilot test was also their new digital assets platform with the purpose of validating its core risk, compliance and operations systems. The platform is meant to host and transact tokenized assets.
Gunjan Kedia, chairman and CEO of U.S. Bank, said in a statement:
This live pilot demonstrates our ability to accelerate global cash management and money movement capabilities. We are excited to create value for our clients and harness the power of a new technology within the banking system.
U.S. Bank has been working with Stellar Development Foundation and PwC on a custom stablecoin since November last year. This was one of the first projects for the digital assets unit that was created just a month earlier.
If further testing goes well and the stablecoin is launched, U.S. Bank expects to be able to improve their customer offering. For example 24/7 payments and cross-border treasury operations.
Not First to the Stablecoin Party
While this is a great step forward for U.S. Bank, they’re definitely not first to the stablecoin party. On September 1st, 21 major banks, including Goldman Sachs, Citi and Bank of America announced a plan to launch a stablecoin together. JPMorgan has had a dedicated digital assets unit, Kinexys, for years and has even been running their private blockchain. JPMD is a deposit token that was launched in November of last year.
This is another way in which digital and traditional finance are converging. As traditional finance is moving into digital assets in a big way, just yesterday, Block announced that they were applying for a US national trust bank charter. They join Coinbase, Kraken and many others. The regulatory burden is obviously heavier on the crypto firms, as the GENIUS Act already allows banks to venture into stablecoins without as much red tape.
Jamie Walker, head of Digital Assets and Money Movement at U.S. Bank, said in the statement:
This pilot is another step forward in our broader digital asset strategy. Our focus remains on delivering solutions that solve real client challenges while maintaining the safety, security and reliability that clients expect from U.S. Bank.
Banks can move faster than crypto firms. But traditional finance is a slow-moving, bureaucratic beast. It remains to be seen who gets the upper hand on stablecoins
