Four United States licensed banks have formed a consortium to launch a bank-minted stablecoin, called USDF. This, according to them, will challenge the stablecoins that are mostly non-bank issued.
Dubbed USDF Consortium, its founding members are New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank and Synovus Bank. Two additional companies, Figure Technologies and JAM Fintop, will facilitate and promote the adoption of the upcoming stablecoin.
Additionally, Wednesday’s announcement highlighted that the consortium will grow the number of its FDIC-insured member banks throughout the year.
“USDF opens up endless possibilities for the expanding world of DeFi transactions,” said the CEO of Figure, Mike Cagney. “The ease and immediacy of using USDF for on-chain transactions was demonstrated this fall when NYCB minted USDF used to settle securities trades executed on Figure's alternative trading systems.”
Use of a Public Blockchain
The stablecoin will be minted only by the US banks and can be redeemed 1:1 for cash from any of the Consortium member banks. The consortium is using public Provenance Blockchain for issuing the stablecoin that will ensure peer-to-peer and business-to-business money transfers.
“This will solve a critical need to move funds on blockchain, and it does so in a way that can scale, adheres to regulatory standards and is acceptable to all users from large institutional investors to retail customers,” explained Andrew Kaplan, the Chief Digital and Banking as a Service Officer of NYCB.
“As a form of digital currency created and administered by regulated U.S. banks within the USDF Consortium, USDF will enable wide use of an on-chain real-time payments system that satisfies important principles of safety and soundness, compliance with anti-money laundering standards and financial stability.”
