U.S. Bank, the fifth-largest bank in the United States, is developing a stablecoin on the Stellar network. With this new stablecoin, U.S. Bank follows in the footsteps of other major American banks like Bank of America, Citibank, JPMorgan, and others that are also working on their own stable digital currencies.
U.S. Bank Launches Stablecoin on Stellar #
During a recent podcast, U.S. Bank, PricewaterhouseCoopers (PwC), and Stellar announced a collaboration on a new stablecoin. Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency like the euro or the dollar. U.S. Bank is reportedly currently testing the new stablecoin.
U.S. Bank stated that it chose to launch the stablecoin on Stellar’s network because of its ability to freeze assets and reverse transactions. The bank considers this feature crucial for consumer protection. Mike Villano from U.S. Bank explained:
“One of the big advantages of the Stellar platform, as we did more research and development, was that we learned they have the ability at the base layer of the network to freeze assets and reverse transactions.”
This statement is notable, as a core innovation of blockchain technology is its creation of a decentralized network where no single entity is in control. You can watch the podcast here, where finance experts discuss the future of the financial system:
The GENIUS Act #
The interest from banks has been largely fueled by the approval of new U.S. legislation, the GENIUS Act, which regulates the issuance of stablecoins. This new law is part of the White House’s plan to encourage the use of dollar-based stablecoins, aiming to strengthen the dollar’s dominant role as a world currency.
At the same time, it should create more demand for U.S. Treasury bonds, a key funding source for the government. Stablecoin issuers often invest the reserves backing their stablecoins in U.S. Treasuries.
According to the U.S. Treasury Department, stablecoin issuers could become the world’s largest buyers of U.S. Treasuries by 2030.