Consortium of US banks seeking to launch a bank-issued stablecoin

A consortium of US banks or “an association of FDIC-insured financial institutions,” including New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank, and Synovus Bank, is set to launch a stablecoin “minted in a bank “with the USDF quote.

According to a Press release Released on Wednesday, January 12, the coalition of banks aims to “build a network of banks to promote the adoption and interoperability of a bank-minted stablecoin, which will facilitate the transfer of compatible value on the blockchain, eliminating friction in the financier “. system and unlock the financial opportunities that blockchain and digital transactions can bring to a larger network of users. “

Exclusively minted by US banks.

USDF, a bank-minted alternative to non-bank-issued stablecoins, will be minted exclusively by US banks and can be exchanged 1: 1 for cash from a member bank. According to the press release, USDF “addresses consumer protection and regulatory concerns of stablecoins issued by non-banks and offers a more secure option for transacting on blockchain.”

The USDF stablecoin will operate on the public Provenance Blockchain, developed by Figure Technologies, Inc., which joins the ranks of the founding members. Provenance Blockchain is a proof-of-stake based application-specific blockchain built on the Cosmos SDK and “designed and developed to support the needs of the financial services industry by providing a ledger, ledger, and exchange between multiple financial assets and markets,” as stated in the Provenance Blockchain documentation.

According to the same documentation, Provenance Blockchain includes an on-chain governance mechanism to manage software updates and upgrades, as well as to govern the use of community funds from the Provenance Blockchain. Users holding staked HASH * tokens can participate in voting on governance proposals that drive the evolving set-up of the blockchain.

* Readers, be careful with the HASH token; There are several HASH tokens out there, which are NOT the Provenance Blockchain HASH token.

Peer-to-peer and business-to-business money transfers

The press release further states that “the availability of USDF on a public blockchain means that in addition to business-to-business and peer-to-peer money transfers, banks and their customers will be able to use USDF for a wide range of applications, including the financing of capital calls, as well as the financing of invoices and supply chains ”.

“USDF opens up endless possibilities for the expanding world of DeFi transactions,” said Figure CEO Mike Cagney.

“The ease and immediacy of using USDF for on-chain transactions was demonstrated this fall when NYCB coined USDF to settle securities transactions executed on Figure’s alternative trading systems. We are tremendously excited that NYCB looks forward to minting USDF on demand and on a regular basis in the coming weeks. “

USDT, USDC face competition

If released to the public, the USDF stablecoin will be ready to compete with established centralized stablecoins such as Tether (USDT), Circle’s USDC, and Paxos USDP. However, USDF will have the additional quality of being issued by FDIC-insured financial institutions, which USDT, USDC and USDP do not.

This latest stablecoin initiative adds weight to the field that drives the argument that the US should not develop a federal central bank digital currency (CBDC) to China, instead letting the private market provide a solution.

At the time of writing, CryptoSlate was unable to conclude any decentralized ownership of the Provenance Blockchain or the intended USDF token. Judging from the Provenance Blockchain documentation, the blockchain is public, the wallets support token self-custody, and it seems like anyone can install and run a network node. However, it is not yet clear whether issuing banks will be able to blacklist or cancel issued tokens, as is the case with current centralized stablecoin tokens.

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