In brief
- U.S. Bank is testing its own stablecoin on the Stellar blockchain.
- The firm is working with the Stellar Development Foundation and PwC on the project.
- U.S. Bank joins Citi, Goldman Sachs, Bank of America, and others as traditional banks now experimenting with stablecoins and crypto rails.
Publicly traded bank U.S. Bank is testing a stablecoin on the Stellar blockchain, the firm announced on Tuesday.
The Minneapolis-based bank is collaborating with consulting firm PwC and the Stellar Development Foundation on the project.
“It’s another way to move money on a blockchain, and we look at blockchain as an alternative payment rail,” said Mike Villano, senior VP and head of digital asset products at US Bank, on the Future of Finance podcast. “We’re very interested to see what use cases are going to manifest from that and what customers are going to be most interested in.”
The firm joins a growing list of banks nationwide that are considering diving into the stablecoin waters, as institutional appetites grow following the signing of the GENIUS Act, which regulates the issuance and trading of the tokens.
Last month, Citi, Goldman Sachs, Barclays, and Bank of America, among others, were included in a list of banks that are considering a joint stablecoin venture. Prior to that, both Citi and Bank of America had individually showcased their interest in stablecoins earlier this year.
“The primary objective was to demonstrate the promise of blockchain in a trusted, bank-grade environment,” Kurt Fields, a Blockchain leader at PwC, said of U.S. Bank’s engagement.
The firm’s work alongside Stellar is in part because of the layer-1 network’s underlying architecture, which allows for freezing or undoing transactions at the blockchain level.
“One of the great things about the Stellar platform, as we did some more research and development on it, was learning that they have the ability at their base operating layer to freeze assets and unwind transactions,” said Villano. “Often, you might write that into the business logic in itself, but in this instance you can do it at the core blockchain layer.”
Stellar’s payments and remittances focused blockchain has been live since 2014. It currently ranks 19th by stablecoin market cap with around $212 million worth of stables currently living on the network—$200 million or 94% of which is issued as Circle’s USDC dollar-backed stablecoin.
The network has seen stablecoin outflows of more than 20% in the last seven days, according to data from DefiLlama.
Its partnership with Stellar isn’t U.S. Bank’s only connection to stablecoins. In October, the firm announced it would custody the reserves for crypto bank Anchorage Digital’s stablecoins.
Shares of U.S. Bancorp are up 2.8% on Tuesday, recently changing hands at $49.08 per share.
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