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Custodia and Vantage Bank Create First Bank Create a Stablecoin on Ethereum

Custodia Bank has teamed up with Vantage Bank to tokenize its U.S. dollar deposits, a first-ever milestone for banking. This new partnership has created Avit, a stablecoin that lives on the Ethereum blockchain and allows banks to compliantly invest in digital assets.

In a big deal, Custodia Bank has teamed up with Vantage Bank to create what they say is the first-ever bank-created stablecoin on a free blockchain. The goal is to change how banks do business using blockchain technology, and that will change how digital transactions occur.

The project, which was revealed on March 25, allows for the tokenization of demand deposits in U.S. dollars to enable the issuance, transfer, and redemption of Avit stablecoins on the Ethereum blockchain through the ERC-20 standard. It creates a payment rail in the U.S. banking system for quicker payments.

According to the CEO of Custodia, Caitlin Long, the transaction achieves a regulatory milestone that proves that U.S. banks can legally tokenize deposits. She asserts that Avit embodies “real dollars” due to its one-to-one backing with demand deposits in contrast to synthetic stablecoins that rely on other mechanisms for value stability.

Vantage Bank president and CEO Jeff Sinnott said the initiative is a paradigm shift for the financial service industry. It shows blockchain and stablecoin’s potential for payments. The partnership is a sign of the increased demands that banks are feeling for digital assets.

Custodia has strong connections to Bitcoin, yet the decision to build Avit on Ethereum is noteworthy. Fans of Ethereum were quick to praise the decision, pointing out that it is the first in stablecoins. Ethereum now boasts more than $125.8 billion in stablecoins, outperforming the rest.

The project is still undergoing testing, but it’s a crucial start for integrating blockchain into the traditional banking space. Both Custodia and Vantage Bank remain upbeat over future stablecoin adoption and regulatory developments that will further unlock innovations in the sector.

This partnership links traditional banking with modern blockchain solutions and also sets the new framework for such advanced work that the digital assets cover in day-to-day life transactions.

author avatar
Satpal S
Satpal is an Editor and Author at 4C Media Co, specializing in all stories and news related to crypto and finance.
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