An association of financial institutions insured by the Federal Deposit Insurance Corporation (literally translated as Federal Deposit Guarantee Agency, FDIC) was launched on Wednesday. Its mission is to build a network of banks in order to promote the adoption and interoperability of a stablecoin issued by a bank.
USDF will see the light of day
The Consortium of U.S. Banks (the association of FDIC-insured financial institutions), including New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank and Synovus Bank, is set to launch a stablecoin “issued by a bank” with the USDF ticker.
According to a Press release published on Wednesday 12 January, the coalition of banks aims to “Building a banking network with the goal of driving the adoption and interoperability of a bank-minted stablecoin. This will facilitate compliant transfer of value on the blockchain, eliminating disputes in the financial system and unlocking the financial opportunities that blockchain and digital transactions can provide to a larger network of users. »
the minting from corner made exclusively by US banks
Representing an alternative to non-bank issued stablecoins, USDF will be produced exclusively by US banks and can be exchanged in a 1:1 ratio against money from a member bank. According to the press release, USDF “addresses consumer protection and regulatory requirements for non-bank issued stablecoins while providing a more secure option for transactions on the blockchain. »
The USDF stablecoin will run on the Provenance Blockchain, developed by Figure Technologies, which joins the ranks of founding members. Blockchain Provenance is a chain application specific model-based proof-of-stake and built on framework SDK Cosmos. She is “designed and developed to meet the needs of the financial services industry by providing an accounting record and trading of multiple assets in financial markets”, as the documentation on its website indicates.
According to the same documentation, Provenance Blockchain includes a governance mechanism we chain intended to manage software updates and enhancements as well as regulate the use of Provenance Blockchain community funds. Users holding HASH tokens can participate in voting on governance proposals that drive the evolution of the blockchain configuration.
Money transfers between individuals and between companies
The press release adds that “The availability of USDF on a public blockchain means that in addition to person-to-person and business-to-business money transfers, banks and their customers will be able to use USDF for a wide range of applications, including equity financing as well as on-bill and supply chain financing. »
“USDF opens up endless possibilities for the burgeoning world of DeFi transactions. », said Mike Cagney, CEO of Figure.
“The ease of using USDF for transactions we chain was demonstrated this fall when the NYCB used it to settle trades on Figure’s alternative trading systems. We are extremely pleased that the NYCB expects to perform the minting from USDF on demand or on a regular basis in the coming weeks. »
USDT and USDC stablecoins are challenged
Once officially launched, the USDF stablecoin will be able to compete with established stablecoins such as USDT from Tether, USDC from Circle, and USDP from Paxos. However, USDF will have an added advantage because it is issued by FDIC-insured financial institutions, which USDT, USDC, and USDP are not.
This latest stablecoin initiative is able to show that the United States should not develop a Federal Central Bank (CBDC) digital currency like China. On the contrary, they have the possibility of allowing the private market to provide a relevant solution.
In sum, judging from the Provenance Blockchain documentation, it is public, the wallets have the self-custody tokens and it looks like anyone can install and run a node of its network. However, it is not yet clear whether issuing banks will be able to blacklist or cancel issued tokens, as is the case with current centralized stablecoins.
FDIC-insured U.S. banks will issue their USDF currency while expanding the stablecoin market. In this regard, the country would not need to design and enforce a harsh legal framework for this sector or even to forbid cryptocurrency-related activities like the People’s Republic. We will follow the evolution of the situation, while suggesting that you stay on Cointribune in order to be up to date!
Source: CryptoSlate
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Salome Guerin
If cryptocurrencies are synonymous with financial freedom, then they must play a key role in the financial emancipation of women. With the right education, crypto can be a powerful tool in waging the battle against gender inequality.
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