U.S. Bank's work alongside Stellar stems partly from the layer-1 network's underlying architecture, which allows for freezing or undoing transactions at the blockchain level.
Stablecoin News
U.S. Bank is testing its own stablecoin on the Stellar blockchain, joining a growing list of traditional banking institutions working on dollar-backed digital assets. The Minneapolis-based bank is collaborating with consulting firm PwC and the Stellar Development Foundation on the project.
Mike Villano, senior vice president and head of digital asset products at U.S. Bank, said blockchain represents an alternative payment rail. The bank is interested in seeing what use cases will manifest from the technology and which customers will be most interested in the offering.
The firm joins Citi, Goldman Sachs, Barclays and Bank of America among banks considering stablecoin ventures as institutional appetites grow following the signing of the GENIUS Act. That legislation regulates the issuance and trading of stablecoins across the United States.
Kurt Fields, a blockchain leader at PwC, said the primary objective was to demonstrate the promise of blockchain in a trusted, bank-grade environment. U.S. Bank's work alongside Stellar stems partly from the layer-1 network's underlying architecture, which allows for freezing or undoing transactions at the blockchain level.
Villano explained that one advantage of the Stellar platform is the ability at the base operating layer to freeze assets and unwind transactions. Often such features might be written into business logic, but Stellar enables them at the core blockchain layer.
Stellar's payments and remittances focused blockchain has been live since 2014 and currently ranks 19th by stablecoin market cap with around $212 million worth of stables on the network. About $200 million or 94% of that total is issued as Circle's USDC dollar-backed stablecoin.
The network has seen stablecoin outflows of more than 20% in the last seven days. U.S. Bank's partnership with Stellar is not its only connection to stablecoins, as the firm announced in October it would custody reserves for crypto bank Anchorage Digital's stablecoin products.
U.S. Bank formed a digital assets division last month geared toward growing revenue from emerging digital products and services such as stablecoin issuance, cryptocurrency custody, asset tokenization, and digital money movement. Dominic Venturo, chief digital officer at U.S. Bancorp, said at the time that clients increasingly want to understand how digital assets can help them safely move money, store deposits and use tokenized assets.
U.S. Bank is the fifth-largest bank in the United States as of Sept. 30, with $671 billion in assets under management. The Stellar network has managed 99.99% uptime for the last decade and is also used by financial firms like Taurus, Franklin Templeton, WisdomTree and Circle, positioning it as a preferred infrastructure choice for institutional crypto adoption.
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