Custodia Bank and Vantage Bank Pioneer Bank-Issued Stablecoin on Ethereum, Boosting Stablecoin Market Cap by $4 Billion

Custodia Bank, in collaboration with Vantage Bank, has successfully tokenized dollar-demand deposits by issuing its Avit stablecoin on the Ethereum mainnet. This marks the "first bank-issued stablecoin on a permissionless blockchain," according to Custodia Bank, and was executed through eight transaction stages. Custodia managed the blockchain aspects, while Vantage Bank handled fiat reserves and FedWire/ACH services. Custodia Bank CEO Caitlin Long emphasized the regulatory compliance achieved, hoping for future regulatory easing to benefit from blockchain's global reach. The transactions showcased low costs, fast settlement, programmability, and auditability. This initiative introduces a new USD payment rail within the U.S. banking system amid rising global demand for USD stablecoins. This collaboration gains significance as stablecoins attract regulatory attention, evidenced by the GENIUS Act, which aims to clarify stablecoin regulations. The stablecoin market capitalization has surged by $4 billion in the last week, reaching over $233 billion, according to DefiLlama data.