Custodia Bank Launches First US Bank-Issued Stablecoin on Ethereum

Custodia Bank is venturing into the stablecoin business. On Tuesday, March 25, Custodia Bank disclosed that it had collaborated with Vantage Bank to tokenize U.S. dollar demand deposits on Ethereum, making the token "Avit" the first-ever U.S. bank-issued stablecoin on a permissionless blockchain. Additionally, Custodia asserts that the product complies with all relevant anti-money laundering and sanctions regulations. Commenting on the development, Custodia Bank founder and CEO Caitlin Long stressed that Avit opened the door for legacy finance to benefit from blockchain technology's global, permissionless, low-cost, and programmable nature within the banking system, something she asserts was not previously possible. https://twitter.com/CaitlinLong_/status/1904523878195507299?t=fw1xXqxRbY8YUdPsUu4i1w&s=19 She argued that unlike other stablecoins classified by the Federal Reserve as synthetic dollars, Avit represented "real dollars" as it was issued by a bank authorized to take demand deposits. This distinction, she believes, will likely lower the barriers to entry for traditional finance (TradFi). However, it is not Avit's blockchain adoption potential that has caught the attention of crypto natives. "Bitcoin Maxi Issues Stablecoin on Ethereum" For many observers, the shock is the decision of Custodia, run by Long, a notorious Bitcoin maximalist, to launch on Ethereum. The situation was made even more ironical as Custodia seemed to shy away from mentioning Ethereum in their announcement, with some poking the crypto bank to "say Ethereum." https://twitter.com/AlexanderFisher/status/1904500864867328374?t=kWKfyRPaQVFKUzbXmBO1-w&s=19 Even VanEck's Head of Digital Assets Research, Matt Sigel, joined in on the jabs, humorously "fixing" the Custodia announcement headline to: "Bitcoin Maxi Issues Stablecoin on Ethereum." https://twitter.com/matthew_sigel/status/1904499035945181475?t=VbQhUvdyVSZdiV4TjbrFUA&s=19 Whatever the case, Custodia's recent venture comes as the Trump administration is pushing for stablecoin regulations before the end of the year. In line with this push, the Senate Banking Committee recently passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to a full Senate vote.