Caitlin Long says this is the future of finance that will change the crypto industry, as US banks Custodia Bank and Vantage Bank have joined forces to launch the first-ever stablecoin “Avit” on the Ethereum blockchain, with the ability to tokenize US dollar deposits using the ERC-20 standard.
Customers can move Avit tokens into self-custody, conduct business-to-business transactions outside the banking system, and later redeem the tokens for US dollar deposits. In order to comply with US regulations, both institutions have implemented specific policies and documents to comply with Bank Secrecy Act, anti-money laundering, and Office of Foreign Assets Control (OFAC) requirements.
Caitlin Long, CEO of Custodia, emphasized the importance of regulatory collaboration, stating, “We have pioneered a regulatory/legal partnership that demonstrates that US banks can work together to create on-demand deposit tokens on a blockchain that are permissionless and compliant.
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Jeff Sinnott, President and CEO of Vantage Bank, spoke about the wider impact of this project, saying, “This is a pivotal moment in the financial landscape, demonstrating how blockchain and stablecoins can revolutionize the payments system. “This transaction empowers the bank to take a responsible lead in improving cross-border payments, while leveraging the strength of the US dollar and demonstrating regulators’ support for responsible innovation.” The entire process leverages Custodia’s 2022 US patent for converting bank deposits into dollars on a permissionless smart contract platform, laying the foundation for further blockchain integration in a compliant banking environment.